MCA Requires Reporting on “What is not DEPOSIT?”

MCA Requires Reporting

Recently MCA has issued a notification dated 22nd January 2019 effective from the same date in which the authority has made certain amendments which is of much significance in the Companies (Acceptance of Deposits) Rules, 2014.Companies finds that funds obtained by the way of deposits from their members and others play a useful part in supplementing their need of resources for the revenue expenses. Deposits can be a secured or unsecured borrowing. Firstly, let’s understand “what is deposit? and what is not deposit?”

What is Deposit?

Deposit is a sum of money paid into a bank it also refers to a part of funds used as security for the delivery of services. Company place funds into an account to increase the credit balance of the Company’s Account and to meet out the working capital.

Deposits are of 2 kinds-

  • Acceptance of Deposits from the Members-A Company (Private or Public) can accept deposits from its member.
  • Acceptance of Deposits from the Public-Only a Public company having a net worth of not less than 100 crore or a turnover of not less than 500 Crore can accept deposits from the Public. Such company be referred to as a ‘ELIGIBLE COMPANY’

What is not Deposit?

The sum of money which do not fall within the ambit of the definition of deposits under the Companies Act 2013 are-

  • Loans taken by a company from another company;
  • Non-interest-bearing amount received and held in trust;
  • Any amount received from a person who at the time of receipt of amount was the director of the company and a declaration was received by the director to the company.
  • Amount received from an employee of the company i.e. employee security deposit.
  • Unsecured loans from the promoters(Any amount brought in by the promoter)
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Section Used and Their Applicability

Sections 73 to 76A of Companies Act, 2013 provide the provisions related to acceptance of deposits;

  • From members by private companies. (Section 73)
  • From persons other than members by public companies-(Section 76) and.

The authority has made certain amendments by introducing New section 76A i.e .When a company accepts or invites any other person to accept or invite on its behalf any deposits in contravention of the manner prescribed under section 73& 76 or if the company fails to repay the deposit or part of it-

The company shall in addition to the payment due and the interest thereon shall be punishable which shall not be less than 1 crore rupees or twice the amount of deposits, whichever is lower, but which may extend to 10 crores.

Every officer involved and is in default shall be punishable with imprisonment which may extend to 7 years/and fine which shall not be less than 25 lakh rupees with maximum extension to 2 crore rupees. (Section 76A)

Significance of the Amendments

As per the amendment the companies are required to file return in terms of reporting to the Registrar of Company

  • One Time Return

The company will file one time return which will give the details of the outstanding receipt of money/loan which has not been considered as Deposits as per the rule 2(1)(c) of the rules and the reporting has to be made by the company within 90 days of the said publication i.e. 22nd January 2019.

  • Periodic Return

The company will give the details of particulars of transaction which are not considered as deposits within 30th June of every year.

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Functions to be Performed by the Company

A Company by passing ordinary resolution may accept deposits from its members subject to the fulfillment of following conditions-

  • Issuance of Circular to the Members and RoC

A circular shall be issued to the members and the same must be filed along with the statement with the registrar within 30 days before the date of the issuance of the circular and the statement should reflect-

a. Financial position of the company

b. Credit Rating obtained by the company

c. Details of Existing Depositors

d. Amount due to existing Depositors.

  • Maintenance Of Liquid Fund

Every company falling under the provision shall deposit on or before the 13th day April each year, such sum which shall not be less than 20% of the amount of its deposits maturing during the financial year by opening a separate account in a scheduled bank termed as “Deposit Repayment Reserve Account”.

DISCLAMER CLAUSE-The registrar or Central government does not take any responsibility either for the financial soundness of any deposit scheme or deposits which is being accepted or invited for the correctness of the statement made in the circular in the form advertisement.

Companies Covered under the Amendments

Excluding the Government Companies, the amendments will cover almost all the companies i.e. Public or Private companies as almost all the receipts of money falls under the list of Rule 2(1)(c). The central government has specified to certain class /companies to whom the provisions shall not apply. The receipts which are excluded from the rule 2(1) (c) are as mentioned below-

  • Amount from Government-Any amount received by the government(Central or state ,any local authority)
  • Amount from Foreign Governments-includes foreign or international banks and resident outside India.
  • Loan from Banking Company/PFI-Any banking company, co-operative banks, PFIs, Insurance Banks.
  • Commercial Papers-Any amount received against issuance of commercial paper.
  • Inter Company Loan-Any amount received by any other company.
  • Share Application Money-Advance towards allotment
  • Amount from Directors
  • Bonds or Debentures
  • Amount accepted by the Nidhi company
  • Unsecured Loans from the promoters
  • Employee security deposits
  • Trusts
  • Suppliers. Security deposits/Capital Advances
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Note As mentioned above,Banking companies and NBFCs are not required to fulfill the compliances of the provisions related to acceptance of Deposits as per the provisions of Section 73 of Companies Act 2013.

It also excludes amount accepted by-

  • Chit Fund Company
  • Collective Investment Scheme
  • Start-Up Company
  • Alternate Investment Funds
  • Domestic Venture Capital Funds
  • Infrastructure Investment Trusts
  • Mutual Funds Registered With SEBI

Period of Acceptance of Deposits

The minimum and maximum period of Deposits is-

  • Minimum Period-6 months not exceeding 10% of (PSC + Free Reserve and Security Premium Account) repayable after 3 months.

Exception-Short term Deposits.

  • Maximum Period-36 months.

Return of Deposits

Every Company Shall File A Return of Deposits in FORM DPT-3 with the roc on or before 30th June of every year which shall be duly certified by the auditors of the Company.


It is clarified by MCA that such amounts received by the private companies prior to 1st April 2014 shall not considered as deposits as per the companies Act 2013 subject to the condition that such private companies shall disclose in the notes to its financial statement for the financial year commencing on or after 1st April 2014.The amendment has been made to know to what extent the ROC were successful on obtaining the required details and will benefit them from getting those information on a regular  basis at one place. In the new reporting requirements, the companies will have to disclose details of all these transactions even though the same are not deposits.

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