Prohibition on Acceptance of Public Deposits — Section 73(1)
# Prohibition on Acceptance of Public Deposits — Section 73(1)
## The General Rule
No company can accept or renew deposits from the public unless it follows the procedure prescribed under Chapter V of the Companies Act, 2013.
> This is a blanket prohibition designed to protect public depositors from unscrupulous companies.
## Exempted Companies (Proviso to Section 73(1))
The prohibition does NOT apply to:
Type of Company
Reason for Exemption
Banking Companies
Already regulated by RBI under Banking Regulation Act
NBFCs (as defined in RBI Act, 1934)
Regulated separately by RBI
Housing Finance Companies registered with NHB under National Housing Bank Act, 1987
Regulated by NHB
Any other company specified by Central Government after consulting RBI
Specific notification basis
## Key Takeaway
The exempted categories are all entities already regulated by sectoral regulators (RBI/NHB) and hence have their own deposit acceptance frameworks. They do not need to comply with Chapter V provisions.
All other companies wishing to accept public deposits must:
1. Qualify as an 'Eligible Company' (covered separately), AND
2. Follow the procedure under Section 76 read with the rules.
Worked example
### Example 1
Example 1: ABC Ltd, an unlisted public company with net worth of ₹50 crore, wants to accept deposits from the general public. Can it do so?
Solution: No. To accept deposits from the public under Section 76, a company must be an 'Eligible Company' — i.e., have a net worth of at least ₹100 crore OR turnover of at least ₹500 crore. ABC Ltd does not qualify. It can only accept deposits from its members under Section 73(2).
### Example 2
Example 2: A Housing Finance Company registered with NHB wants to accept deposits from the public. Does Section 73(1) apply?
Solution: No. HFCs registered with NHB are exempted under the proviso to Section 73(1). They follow NHB regulations instead.
⚠️ Common exam mistakes
Assuming all public companies can accept public deposits — only 'Eligible Companies' (net worth ≥ ₹100 cr OR turnover ≥ ₹500 cr) can do so under Sec 76.
Confusing 'public deposits' (Sec 76) with 'deposits from members' (Sec 73(2)) — they have different procedures.
Forgetting that NBFCs and Banking Companies are completely outside Chapter V — their deposit-taking is governed by RBI.
Bare-Act text Section 73(1) · Companies Act, 2013 · click to expand
On and after the commencement of this Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under this Chapter: Provided that nothing in this sub-section shall apply to a banking company and non-banking financial company as defined in the Reserve Bank of India Act, 1934 and to such other company as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf.