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Section 73

Prohibition on acceptance of deposits from public

(1)
On and after the commencement of this Act, no company shall invite, accept or renew deposit under this Act from the public except in a manner provided under this Chapter:
Proviso

Provided that nothing in this sub-section shall apply to a banking company and non-banking financial company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) and to such other company as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf.

(2)
A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions, namely :—
(a)
issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed;
(b)
filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular;
(c)
depositing, on or before the thirtieth day of April each year, such sum which shall not be less than twenty 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 to be called deposit repayment reserve account;
(c)
depositing such sum which shall not be less than fifteen per cent of the amount of its deposits maturing during a financial year and the financial year next following, and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve account;

providing such deposit insurance in such manner and to such extent as may be prescribed ;

(e)
certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits such deposits and where a default had occurred, the company made good the default and a period of five years had lapsed since the date of making good the default; and
(f)
providing security, if any for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company:
Proviso

Provided that in case where a company does not secure the deposits or secures such deposits partially, then, the deposits shall be termed as “unsecured deposits” and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits.

(3)
Every deposit accepted by a company under sub-section (2) shall be repaid with interest in accordance with the terms and conditions of the agreement referred to in that sub-section.
(4)
Where a company fails to repay the deposit or part thereof or any interest thereon under sub-section (3), the depositor concerned may apply to the Tribunal for an order directing the company to pay the sum due or for any loss or damage incurred by him as a result of such non-payment and for such other orders as the Tribunal may deem fit.
(5)
The deposit repayment reserve account referred to in clause ( c ) of sub-section (2) shall not be used by the company for any purpose other than repayment of deposits.
Notes, amendments & references (23)

Refer circular 05/2015. To view the clarification. To view the rule, Click Here

a Specified IFSC public company which accepts from its members, monies not exceeding one hundred per cent. of aggregate of the paid up share capital and free reserves, and such company shall file the details of monies so accepted to the Registrar in such manner as may be specified vide Exemption Notification to specified IFSC Public Companies, GSR 08 (E) dated 04.01.2017. To view the notification Click Here

2. a private company which accepts from its members monies not exceeding one hundred per cent. of aggregate of the paid up share capital and free reserves, and such company shall file the details of monies so accepted to the Registrar in such manner as may be specified Inserted vide Notification no. G.S.R. 464(E) dated 5th June 2015.To view the notification, Click Here

Above mentioned exemption is substituted vide exemption notification to Private Companies dated 13th June, 2017.To view the notification Click Here

2. a private company-

(A) which accepts from its members monies not exceeding one hundred per cent. of aggregate of the paid up share capital, free reserves and securities premium account; or

(B) which is a start-up, for five years from the date of its incorporation; or

(C) which fulfils all of the following conditions, namely:-

(a) which is not an associate or a subsidiary company of any other company;

(b) if the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid up share capital or fifty crore rupees, whichever is lower; and

(c) such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under this section:

Provided that the company referred to in clauses (A), (B) or (C) shall file the details of monies accepted to the Registrar in such manner as may be specified.

(The exceptions, modifications and adaptations provided above shall be applicable only to those Private Companies which has not committed a default in filing its financial statements under section 137 of the said act or annual return under section 92 of the said act with the registrar).

Refer Companies (Acceptance of Deposits) rules,2014. To view the rule, Click Here

Refer Rule 4 – Companies(Acceptance of Deposits)Rules,2014.To view the rule, Click Here

Substituted vide Companies (Amendment) Act, 2017 dated 03.01.2018, w.e.f., 15.08.2018. To view the notification, Click Here

For Deposits maturing in the financial year 2020-21, this requirement shall be allowed to be complied with till December 31, 2020. To view the further relaxation circular dated 29.09.2020, Click Here .

For Deposits maturing in the financial year 2020-21, this requirement shall be allowed to be complied with till September 30, 2020. To view the further relaxation circular dated 19.06.2020, Click Here.

For Deposits maturing in the financial year 2020-21, this requirement shall be allowed to be complied with till June 30, 2020. To view the relaxation circular dated 24.03.2020, Click Here.

" data-title="”( d )” Omitted vide Companies (Amendment) Act, 2017 dated 03.01.2018 w.e.f., 15.08.2018. To view the notification, Click Here

as may be prescribed Refer Rule 5 – Companies(Acceptance of Deposits)Rules,2014.To view the rule, Click Here

Refer Rule 73 National Company law Tribunal Rules 2016.To view the rule, Click Here

CLB to exercise powers until NCLT is setup and notified. To view the order, Click Here