Section 76 — Acceptance of Deposits from Public by Eligible Companies
## Section 76 — Public Deposits by Eligible Companies
Only an eligible public company may accept deposits from the public. Eligibility (Rule 2(1)(e)):
Net worth ≥ ₹100 crore OR Turnover ≥ ₹500 crore, AND
Special Resolution passed in General Meeting (filed with ROC before issue of circular).
## Procedural Compliance
All requirements of Section 73 apply mutatis mutandis — circular, financial position, statutory auditor's certificate, DRR, charge etc. Additionally, an eligible company must:
1. Obtain a Credit Rating every year from a recognised credit-rating agency; and
2. The rating must NOT fall below the minimum investment-grade rating (e.g., 'BBB–' or equivalent) during the tenure of the deposit. If it does, the company must inform depositors and stop fresh acceptance.
## Maximum Limits — Eligible Public Company
Source
Maximum Amount
From Members
10% of (PUSC + FR + Securities Premium)
From Public
25% of (PUSC + FR + Securities Premium)
(Government company that is eligible: 35% of (PUSC + FR + SP) from public — overall combined cap.)
## Comparison Snapshot — Sec. 73 vs Sec. 76
Particulars
Sec. 73 (Members)
Sec. 76 (Public — Eligible Co.)
Resolution
Ordinary
Special
Credit Rating
Not mandatory
Mandatory (annual; investment grade)
Circular
DPT-1 to members
DPT-1 + advertisement
Insurance
(Provision exists; currently deferred)
Same
DRR
20% of next-year maturities
20% of next-year maturities
Charge
Mandatory for secured deposits
Mandatory for secured deposits
Trustee
If secured
If secured
## Common Provisions — Tenure of Deposits (both Sec. 73 & Sec. 76)
Cannot be repayable on demand (no demand deposits like savings accounts).
Minimum tenure: 6 months.
Maximum tenure: 36 months (3 years).
Exception — short-term deposit: A company may accept deposits repayable in not less than 3 months for meeting short-term requirements, but such short-term deposits must NOT exceed 10% of (PUSC + FR + SP).
Worked example
### Example 1
Q. An eligible public company has PUSC ₹100 crore, FR ₹40 crore, Securities Premium ₹60 crore. Compute maximum deposits it can accept from members and from public.
A. Base = ₹100 + ₹40 + ₹60 = ₹200 crore.
From members: 10% × ₹200 cr = ₹20 crore.
From public: 25% × ₹200 cr = ₹50 crore.
Combined maximum exposure: ₹70 crore (subject to overall borrowing limits under Sec. 180).
### Example 2
Q. XYZ Ltd. (eligible) wants to raise ₹15 crore from public for working capital, repayable in 4 months. PUSC + FR + SP = ₹200 crore. Is this permissible?
A. A 4-month deposit qualifies as a 'short-term deposit' (≥ 3 months allowed). However, short-term deposits are capped at 10% of (PUSC + FR + SP) = 10% × ₹200 cr = ₹20 crore. ₹15 crore is within this cap, so it is permissible — subject to overall public-deposit cap of 25%.
### Example 3
Q. During the tenure of public deposits, the credit rating of an eligible company is downgraded from BBB to BB. What is the consequence?
A. BB falls below minimum investment grade. The company:
2. Must intimate the rating change to all existing depositors;
3. Existing deposits run their term, but cannot be rolled over.
⚠️ Common exam mistakes
Applying Sec. 76 to a non-eligible public company. A non-eligible public company can NEVER accept public deposits.
Confusing 'eligible company' with NBFC. NBFCs are governed by RBI, not Sec. 76.
Allowing deposit tenure of 1 month or 2 months. Minimum is 6 months (or 3 months for short-term deposits within 10% cap).
Allowing a 5-year deposit tenure. Maximum is 36 months, not 60.
Treating the 10% (members) and 25% (public) caps under Sec. 76 as a single combined 35% bucket — they are separate ceilings.
Bare-Act text Section 76(1) read with Rule 3 of Companies (Acceptance of Deposits) Rules, 2014 · Companies Act, 2013 · click to expand
Section 76(1): Notwithstanding anything contained in section 73, a public company, having such net worth or turnover as may be prescribed, may accept deposits from persons other than its members subject to compliance with the requirements provided in sub-section (2) of section 73 and subject to such rules as the Central Government may, in consultation with the Reserve Bank of India, prescribe: Provided that such a company shall be required to obtain the rating (including its networth, liquidity and ability to pay its deposits on due date) from a recognised credit rating agency for informing the public the rating given to the company at the time of invitation of deposits from the public which ensures adequate safety and the rating shall be obtained for every year during the tenure of deposits.