# Maintenance of Liquid Assets — Deposit Repayment Reserve Account (Rule 13)

## Core Requirement

Every eligible company and every other company accepting deposits shall:

On or before 30th April of every year,
Deposit at least 20% of the amount of deposits maturing during the following financial year (i.e., the immediate next year),
In a separate bank account in a scheduled bank,
Called the 'Deposit Repayment Reserve Account' (DRRA).

## Maintenance Floor

The balance in DRRA shall not at any time fall below 20% of the amount of deposits maturing during the current financial year.

## Restriction on Use

The DRRA shall NOT be used for any purpose other than the repayment of deposits.

## Two Distinct Tests

Test	Cut-off	Base	%
Initial funding	By 30 April	Deposits maturing in next FY	20%
Ongoing floor	At all times	Deposits maturing in current FY	20%

## Memorise

> By 30-April-Year X — deposit 20% of deposits maturing in Year X+1.

> During Year X — balance must never drop below 20% of deposits maturing in Year X.

Worked example

### Example 1

Comprehensive Example: Deposits accepted as follows:

FY Accepted	Date	Amount	Tenure	Redemption Value	Redemption Date	Redemption FY
2017-18	1-1-2018	Rs. 100 cr	2 yrs	Rs. 150 cr	1-1-2020	2019-20
2018-19	1-10-2018	Rs. 200 cr	2 yrs	Rs. 300 cr	1-10-2020	2020-21
2019-20	1-4-2019	Rs. 300 cr	2 yrs	Rs. 400 cr	1-4-2021	2021-22

Calculation of DRR requirements:

By	20% of next year's maturity (initial funding)	20% of current year's maturity (floor)	Minimum amount to be kept in DRR
30-4-2018	20% of FY 2019-20 maturity = 20% of 150 cr = 30 cr	20% of FY 2018-19 maturity = 20% of NIL = NIL	30 cr
30-4-2019	20% of FY 2020-21 maturity = 20% of 300 cr = 60 cr	20% of FY 2019-20 maturity = 20% of 150 cr = 30 cr	60 cr
30-4-2020	20% of FY 2021-22 maturity = 20% of 400 cr = 80 cr	20% of FY 2020-21 maturity = 20% of 300 cr = 60 cr	80 cr
30-4-2021	20% of FY 2022-23 maturity = 20% of NIL = NIL	20% of FY 2021-22 maturity = 20% of 400 cr = 80 cr	80 cr

The required minimum = higher of the two tests.

⚠️ Common exam mistakes

Confusing the 'next FY' base (for initial deposit by 30 April) with the 'current FY' base (for ongoing floor).
Using only 20% of next year's maturity and ignoring the ongoing floor test.
Believing the DRRA can be used for working capital — it can ONLY be used for repayment of deposits.
Forgetting that DRRA must be in a scheduled bank in a separate account.
Applying 20% on total outstanding deposits instead of on deposits 'maturing' during the relevant FY.

Bare-Act text Section 73(2)(c) read with Rule 13 · Companies Act, 2013 · click to expand

As specified in Section 73, the company shall deposit atleast 20% of the amount of its deposits maturing during the following financial year by 30th April each year in a scheduled bank in a separate bank account to be called as deposit repayment reserve account. Rule 13 states that such amount shall not at any time fall below 20% of the amount of deposits maturing during the financial year. The deposit repayment reserve account shall not be used by the company for any purpose other than repayment of deposits.

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Deposit Repayment Reserve Account (Rule 13 / Section 73)

Worked example

⚠️ Common exam mistakes