Section 73 of Companies Act, 2013: Prohibition on Acceptance of Deposits from Public
Section 73 regulates acceptance of deposits by companies. As a general rule, a company cannot invite, accept or renew deposits from the public except as permitted under Chapter V of the Companies Act, 2013. Subject to the Act and the Companies (Acceptance of Deposits) Rules, 2014, a company may accept deposits from its members after satisfying the prescribed conditions.
Meaning of "deposit"
Section 2(31) of the Companies Act, 2013 broadly treats a "deposit" as any receipt of money by way of deposit or loan or in any other form by a company, but excludes categories prescribed in consultation with the Reserve Bank of India. The detailed exclusions are contained in Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014. Therefore, every receipt of money by a company is not automatically a deposit; its legal character must be tested against the Act and the Rules.
What Section 73 prohibits
Section 73(1): A company must not invite, accept or renew deposits from the public except in the manner allowed by Chapter V. This restriction does not apply in the same manner to a banking company, a non-banking financial company as defined under the Reserve Bank of India Act, 1934, or another company specified by the Central Government after consultation with the RBI.
Public deposits permitted for eligible companies are dealt with principally under Section 76. Section 73 primarily sets out the framework for deposits accepted from members.
Conditions for accepting deposits from members under Section 73(2)
A company accepting deposits from its members must comply with the applicable statutory conditions and the Companies (Acceptance of Deposits) Rules, 2014. Important conditions include:
- General meeting approval: the company must pass the resolution required by Section 73(2), subject to the applicable Rules and exemptions.
- Circular to members: the prescribed circular must disclose the company's financial position, credit rating where applicable, number of depositors, amounts due on earlier deposits and other prescribed particulars.
- Filing before circulation: a copy of the circular and statement must be filed with the Registrar at least 30 days before issue of the circular.
- Deposit repayment reserve: on or before 30 April each year, at least 20% of deposits maturing during the following financial year must be kept with a scheduled bank in a separate deposit repayment reserve account.
- Past default: the company must certify that it has not defaulted in repayment of deposits or interest. If a default occurred, it must have been made good and five years must have elapsed from the date on which the default was made good.
- Security: security may be provided for repayment of the deposit and interest. A deposit that is unsecured or only partly secured must be described as an "unsecured deposit" in the relevant circular, form, advertisement or document.
Deposit repayment reserve - Section 73(2)(c) and 73(5)
The reserve is a statutory safeguard for deposit repayment. The amount remaining in the account is governed by the Act and the applicable Rules, and Section 73(5) restricts use of the deposit repayment reserve account to repayment of deposits. The 20% requirement replaced the earlier statutory formula through the Companies (Amendment) Act, 2017, with effect from 15 August 2018.
Repayment and remedy before the Tribunal
Section 73(3) requires every deposit accepted under Section 73(2) to be repaid with interest according to the agreed terms and conditions. Under Section 73(4), where the company fails to repay a deposit, any part of it, or interest due, the depositor may apply to the National Company Law Tribunal for an order directing payment and may seek relief for loss or damage caused by the non-payment, together with such other orders as the Tribunal considers fit.
Key compliance forms and dates
| Compliance | General requirement |
|---|---|
| DPT-1 | Circular or circular in the form of advertisement inviting deposits, where applicable under the Act and Rules. |
| DPT-3 | Annual return of deposits and/or particulars of transactions not considered deposits, as applicable. MCA instructions state that the annual return is filed on or before 30 June with information as on 31 March. |
| Deposit repayment reserve | At least 20% of deposits maturing during the following financial year, deposited on or before 30 April, subject to the Act and Rules. |
Compliance depends on the type of company, the nature of the receipt and applicable exemptions. The Act, current Rules, notifications and MCA filing instructions should be checked for the relevant financial year.
Official legal resources
For the current statutory text, rules, notifications and electronic filing requirements, use the official Government sources below:
Related provisions
Chapter V should be read as a connected scheme. See Sections 74 and 75 - repayment of earlier deposits and damages for fraud and Sections 76 and 77 - public deposits by certain companies and registration of charges.