## Deposit Repayment Reserve Account (DRR)

Statutory mandate: Every company that accepts deposits must create a Deposit Repayment Reserve Account as a safety cushion for repayment of maturing deposits.

### Mechanics

Aspect	Requirement
When to deposit	On or before 30th April of each financial year
How much	At least 20% of the amount of deposits maturing during the following financial year (1 April – 31 March)
Where	In a separate bank account with a Scheduled Bank — to be named 'Deposit Repayment Reserve Account'
Use	Exclusively for repayment of deposits; cannot be used for any other purpose

### Illustration

If deposits maturing during FY 2026-27 = ₹100 lakh, the company must deposit at least ₹20 lakh in DRR on or before 30 April 2026.

### Key Points

DRR is a liquidity buffer, not a profit-and-loss appropriation.
The 20% is the minimum — the company may deposit more.
The balance (i.e., 80% of maturities) is expected to be honoured from operating cash flows.
The account must be earmarked — pooling it with general operations defeats the purpose and attracts penalty.

### Old language vs current language

Originally Sec. 73(2)(c) required 15% of deposits maturing during the current and next financial years to be deposited. Post-amendment, it is 20% of deposits maturing during the next financial year only. (Students must quote the current 20% figure in exams.)

Worked example

### Example 1

Q. Deposits maturing during FY 2026-27: ₹50 crore. Compute minimum DRR and the latest date by which the company must deposit it.

A. Minimum DRR = 20% × ₹50 crore = ₹10 crore, to be deposited in a separate Scheduled Bank A/c titled 'Deposit Repayment Reserve Account' on or before 30 April 2026.

### Example 2

Q. A company deposited 20% of deposits maturing in the current year (FY 25-26) instead of the next year (FY 26-27). Is the compliance valid?

A. No. Sec. 73(2)(c) requires DRR equal to 20% of deposits maturing in the following financial year, not the current one. The company is in non-compliance and liable to penalty under Sec. 73(4)/76A.

### Example 3

Q. Can the amount in DRR be invested in fixed deposits or government securities to earn interest?

A. No. The Rules require it to be kept in a separate bank account with a Scheduled Bank. It cannot be diverted to other investments — that would defeat the liquidity-cushion purpose.

⚠️ Common exam mistakes

Writing 15% instead of 20% (pre-amendment figure).
Computing DRR on deposits maturing in the current year instead of the next financial year.
Forgetting the 30th April cut-off date.
Saying DRR can be invested in mutual funds or government securities — the Act specifies a Scheduled Bank account only.
Confusing DRR with Debenture Redemption Reserve (DRR is also the same acronym in debenture context — clarify in answer).

Bare-Act text Section 73(2)(c) · Companies Act, 2013 · click to expand

Section 73(2)(c): depositing, on or before the 30th day of April each year, such sum which shall not be less than 20 per cent of the amount of its deposits maturing during the following financial year and kept in a scheduled bank in a separate bank account called deposit repayment reserve account.

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Deposit Repayment Reserve Account (DRR) — Sec. 73(2)(c)

Worked example

⚠️ Common exam mistakes