Definition of 'Deposit' — Inclusions and Exclusions (Rule 2(1)(c) of Deposit Rules)
# Definition of 'Deposit' — What is Included and What is Excluded
Section 2(31) defines 'deposit' to include any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with RBI.
The prescribed exclusions are listed in Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014. If a receipt falls within these exclusions, it is not a deposit and therefore the deposit chapter (Sections 73–76) does not apply to it.
## Amounts that are NOT treated as 'deposit'
### A. Receipts from governmental / institutional sources
Amounts received from the Central Government, State Government, or any other source whose repayment is guaranteed by either Government.
Amounts received from a local authority or a statutory authority constituted under an Act of Parliament/State Legislature.
Amounts received from foreign Governments, foreign or international banks, multilateral financial institutions, foreign Government-owned development financial institutions, foreign export credit agencies, foreign collaborators, foreign bodies corporate, foreign citizens, foreign authorities or persons resident outside India, subject to FEMA, 1999 and rules thereunder.
### B. Receipts from banks / NBFCs
Loans/facilities from any banking company, SBI, subsidiary bank, banking institution under BR Act.
Loans/financial assistance from Public Financial Institutions notified by the Central Government, or from any regional financial institution / insurance companies / scheduled banks.
### C. Money-market instruments
Amount raised by issue of commercial paper or any other instruments issued in accordance with RBI guidelines.
### D. Inter-corporate deposits
Amount received from another company is not a deposit.
### E. Subscription / application money — conditional exclusion
Money received as subscription to any securities (including share application money or advance towards allotment of securities) pending allotment is not a deposit only if:
the securities are allotted within 60 days from the date of receipt, OR
if not allotted, the money is refunded within 15 days thereafter.
If money is not refunded within those 15 days, the amount is deemed a deposit from the day of expiry of the 60-day period.
Adjustment other than allotment or refund (e.g., adjusting share application money against any other liability) is not allowed — it will be treated as a deposit.
### F. Receipts from Directors and their Relatives
Type of Company
From Director
From Director's Relative
Private Company
Not a deposit
Not a deposit (subject to declaration)
Public Company
Not a deposit
Treated as a deposit
Conditions (common to both):
A written declaration is filed by the director/relative at the time of giving the money stating that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others.
The company discloses the details in the Board's Report.
### G. Debentures / Bonds
Secured bonds or debentures with a **first charge or charge ranking pari passu with the first charge on any assets** (excluding intangible assets) of the company.
Compulsorily convertible debentures/bonds which are convertible into shares within 10 years from date of issue.
Listed non-convertible debentures issued to a person other than by way of public offer — not a deposit.
### H. Security deposits from employees
A non-interest-bearing security deposit received from an employee, provided the amount does not exceed his annual salary under a contract of employment.
### I. Non-interest-bearing amounts held in trust
Any non-interest-bearing amount received and held in trust is excluded.
### J. Advances for goods, services and property
Advance towards consideration for an immovable property under an agreement/arrangement, provided the advance is adjusted against the property in accordance with the terms.
Advance for supply of goods or provision of services, accounted for in any manner whatsoever, provided such advance is appropriated against supply within 365 days.
Advance under long-term projects for supply of capital goods (no 365-day limit).
Advance for future services in the form of warranty or maintenance contract, for a period not exceeding the period prevalent as per common business practice or 5 years, whichever is less.
Advance received and as allowed by any sectoral regulator or in accordance with directions of any Central / State Government.
Advance for subscription in respect of publication, whether in print or electronic media.
### K. Promoter's unsecured loan
Amount brought in by promoters as unsecured loan in pursuance of a stipulation by a lending bank/financial institution is excluded — but only till the loan from the bank/PFI is repaid and not thereafter.
### L. Other specific exclusions
Amount received by Nidhi companies in accordance with Section 406.
Amount received by way of subscription to a chit under the Chit Funds Act, 1982.
Amount received under any collective investment scheme in compliance with SEBI regulations.
₹25 lakh or more received by a start-up company by way of a convertible note convertible into equity shares or repayable within 5 years from the date of issue (now extended to 10 years for DPIIT-recognised start-ups).
Amount received from Alternative Investment Funds, Domestic Venture Capital Funds, Infrastructure Investment Trusts, Real Estate Investment Trusts and Mutual Funds registered with SEBI.
Worked example
### Example 1
Example 1 — Share application money: On 1st January, P Ltd. receives ₹50 lakh as share application money. By 1st March (59 days later) it has not allotted. On 16th March, it refunds the money. Is this a deposit?
Solution: The 60-day allotment period ended on 2nd March. The 15-day window to refund expired on 17th March. Since refund (16th March) is within those 15 days, the receipt is not deemed a deposit. Had the refund been on 18th March, it would have been deemed a deposit from 2nd March (expiry of 60 days).
### Example 2
Example 2 — Director's relative: Mrs. R, wife of a director of XYZ Ltd. (a public company), gives the company ₹10 lakh as a loan along with a declaration that the money is from her own savings. Is this a deposit?
Solution: For a public company, money received from a director's relative is treated as a deposit, even with the declaration. The exception applies only to amounts received directly from a director. Therefore XYZ Ltd. must comply with the deposit rules in respect of this ₹10 lakh.
### Example 3
Example 3 — Employee security deposit: S Ltd. receives ₹3,00,000 as a non-interest-bearing security deposit from an employee whose annual salary is ₹2,40,000. Is this a deposit?
Solution: The exclusion applies only when the security deposit does not exceed annual salary. Here the deposit (₹3,00,000) exceeds annual salary (₹2,40,000). Hence, the amount is treated as a deposit and the deposit rules apply.
### Example 4
Example 4 — Advance for goods: ABC Ltd. receives ₹20 lakh as advance for supply of machinery in May 2025. The machinery is supplied in July 2026 (about 14 months later). What is the position?
Solution: Advance for supply of goods is excluded only if appropriated against supply within 365 days. As the supply happened beyond 365 days, the advance is treated as a deposit from the date of expiry of 365 days.
⚠️ Common exam mistakes
Treating money received from a private company / inter-corporate deposit as a 'deposit' — inter-corporate amounts (received from another company) are specifically excluded.
Assuming all advances for goods are excluded forever — the 365-day appropriation rule must be satisfied; failing that, the advance becomes a deposit.
Forgetting that for a public company, loans from a director's relative are deposits even with declaration; the exclusion is narrower than for a private company.
Missing the conditions on share application money — non-allotment within 60 days AND non-refund within next 15 days converts the receipt into a deeming-deposit retrospectively.
Treating any debenture as excluded — only secured (with first or pari-passu charge), compulsorily convertible within 10 years, or listed NCDs qualify; non-convertible unlisted unsecured debentures are deposits.
Forgetting that adjustment of share application money against any other liability (other than allotment or refund) is not permitted and converts the amount into a deposit.
Treating an employee security deposit as excluded regardless of amount — the exclusion requires that the deposit be non-interest-bearing AND not exceed the employee's annual salary.
Bare-Act text Rule 2(1)(c) · Companies (Acceptance of Deposits) Rules, 2014 · click to expand
Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 — 'deposit' includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include — (i) any amount received from the Central Government or a State Government, or any amount received from any other source whose repayment is guaranteed by the Central Government or a State Government, or any amount received from a local authority, or any amount received from a statutory authority constituted under an Act of Parliament or a State Legislature; (ii) any amount received from foreign Governments, foreign or international banks, multilateral financial institutions … (vii) any amount received from a person who, at the time of the receipt of the amount, was a director of the company or a relative of the director of a private company: Provided that the director of the company or relative of the director of the private company, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others and the company shall disclose the details of money so accepted in the Board's report; (ix) any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari passu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company or bonds or debentures compulsorily convertible into shares of the company within ten years; (xii) any non-interest bearing amount received and held in trust; (xiii) any amount received in the course of, or for the purposes of, the business of the company — as an advance for the supply of goods or provision of services accounted for in any manner whatsoever provided that such advance is appropriated against supply of goods or provision of services within a period of three hundred and sixty five days from the date of acceptance of such advance …