# Definition of 'Deposit'

## Statutory Definition [Section 2(31)]

> 'Deposit' includes 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 the Reserve Bank of India.

## Dissecting the Definition

### 1. It is an Inclusive Definition

The word 'includes' means the definition is not exhaustive — anything that fits the spirit of 'deposit' may be covered, unless specifically excluded.

### 2. Three Modes of Receipt

The money may flow into the company as:

A deposit (express deposit transaction)
A loan
Any other form (catch-all phrase — this is wide!)

### 3. Essential Characteristics

Feature	Description
Repayment	Time-bound (must be repaid by a fixed date)
Security	May be secured OR unsecured
Source	Private company → members only; Public company → members + public

## Special Note: Pre-1st April 2014 Receipts by Private Companies

Question: Are amounts received by private companies from members, directors, or their relatives before 1st April, 2014 to be treated as deposits?

Answer (General Circular No. 5/2015 dated 30-03-2015):

Such amounts shall NOT be treated as deposits
Condition: The private company must disclose in notes to financial statements:
The figure of such amounts
The accounting head under which they have been shown
BUT — any renewal or fresh acceptance on or after 1st April, 2014 must comply with the Companies Act, 2013 and Rules

## Why the Wide Definition?

The legislature wanted to prevent companies from disguising deposits as something else (e.g., calling it 'advance', 'security', etc.) to escape regulation. The exclusions under Rule 2(1)(c) carve out genuine commercial transactions.

Worked example

### Example 1

Example: PQR Pvt. Ltd. received ₹5,00,000 from its member Mr. A on 15th March 2014 as a loan. The company shows it in its notes to financial statements under 'Loans from members'. Is this a deposit?

Answer: No. Since the amount was received before 1st April, 2014 and the company has disclosed it in the notes to financial statements (with figure and accounting head), it will NOT be treated as a deposit. However, if PQR Pvt. Ltd. renews this loan on or after 1st April, 2014, the renewal must comply with the Companies Act, 2013.

### Example 2

Example: A company receives ₹10 lakh from a friend of the director as a 'gift'. The amount is to be repaid later. Is this a deposit?

Answer: Yes. Despite being labelled a 'gift', the substance is that money is received with an obligation of repayment. Since the definition under Section 2(31) is inclusive and covers 'any other form', this will be treated as a deposit unless it falls within the exemptions in Rule 2(1)(c).

⚠️ Common exam mistakes

Treating the definition as exhaustive — it is INCLUSIVE, so the net is wide.
Forgetting that pre-1st April 2014 amounts from members/directors of private companies need disclosure in notes to qualify for the exemption.
Believing that calling a transaction 'advance' or 'gift' automatically removes it from the deposit definition — substance over form prevails.

Bare-Act text Section 2(31); Rule 2(1)(c) · Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 · click to expand

Section 2(31): 'deposit' includes 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 the Reserve Bank of India.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

Definition of 'Deposit' under Rule 2(1)(c)

Worked example

⚠️ Common exam mistakes