What Is a Deposit Under the Companies Act?
What is a deposit under the Companies Act is a question with a wide answer and a narrowing list attached to it. Section 2(31) of the Companies Act, 2013 defines deposit to include any receipt of money by way of deposit or loan or in any other form by a company. What keeps that from swallowing every rupee a company receives is the second half of the definition, which carves out categories prescribed in consultation with the Reserve Bank of India.
Definition
A deposit
under section 2(31) of the Companies Act, 2013 includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India. Section 73 then prohibits accepting deposits from the public outside Chapter V. Source: Companies Act, 2013, sections 2(31) and 73(1).
What counts as a deposit, and what the Act leaves to the rules
The definition has two limbs and only the first is in the statute. Section 2(31) reads that deposit "includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India".
Three drafting choices matter there. Includes, not means, so the definition is inclusive rather than exhaustive. Or in any other form, so labelling a receipt something else does not take it out. As may be prescribed, so the exclusions live in rules made under the Act rather than in the Act.
This page does not restate that exclusion list. The Companies (Acceptance of Deposits) Rules, 2014 were not publicly reachable from a primary source on 29 August 2026, when this page was written, at either the Ministry of Corporate Affairs or India Code. Anything quoted from them here would be quoted from memory rather than from the text, which is not a standard this page will meet. What follows is the statute.
What section 73 prohibits
Section 73(1) is drafted as a prohibition rather than as a grant. In its own words: "On and after the commencement of this Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under this Chapter."
The proviso to section 73(1) takes three populations outside the sub-section: a banking company, a non-banking financial company as defined in the Reserve Bank of India Act, 1934, and such other company as the Central Government may specify after consultation with the Reserve Bank of India. The first two are regulated as deposit-takers under other statutes; the third is whatever the Central Government specifies. Chapter V stands down for all three.
The member route, and its five surviving conditions
Section 73(2) is the door the section leaves open. A company may accept deposits from its members, subject to a resolution passed in general meeting and to rules prescribed in consultation with the Reserve Bank of India, on the terms agreed between the company and its members. It is subject to a lettered list running from (a) to (f), of which clause (d) was omitted by the Companies (Amendment) Act, 2017, being Act 1 of 2018, section 15, with effect from 15 August 2018. Five conditions survive:
| Clause | Condition |
|---|---|
| (a) | Issue a circular to members showing the company's financial position, the credit rating obtained, the total number of depositors, the amount due on previous deposits, and other prescribed particulars |
| (b) | File a copy of the circular with the Registrar within thirty days before the date of issue of the circular |
| (c) | Deposit, on or before 30 April each year, not less than twenty per cent of the deposits maturing during the following financial year, in a scheduled bank in a separate deposit repayment reserve account |
| (e) | Certify no default in the repayment of deposits or interest, and where a default occurred, that it was made good and five years have lapsed since |
| (f) | Provide security, if any, for repayment, including the creation of a charge on the company's property or assets |
Clause (b) reads oddly the first time. The filing is thirty days before the circular goes out, not thirty days after, which makes the Registrar's copy the earlier public record of an intended deposit programme.
Clause (e) carries the wording substituted by Act 1 of 2018, section 15, with effect from 15 August 2018, which added the five-year cooling period after a cured default.
The proviso to clause (f) is a labelling requirement, and it is the one a reader of a deposit circular sees. Where a company does not secure the deposits, or secures them only partially, the deposits shall be termed "unsecured deposits" and shall be so quoted in every circular, form, advertisement or document relating to the invitation or acceptance of deposits.
20%
The minimum share of the deposits maturing in the following financial year that must sit in the deposit repayment reserve account by 30 April each year
Source: Companies Act, 2013, section 73(2)(c), as substituted by Act 1 of 2018, s. 15
Section 73(5) then ring-fences that account. 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.
What a depositor can do, and what a default costs
Section 73(3) requires every deposit accepted under sub-section (2) to be repaid with interest in accordance with the terms and conditions of the agreement. Section 73(4) gives the depositor a direct route when it is not: the depositor may apply to the Tribunal for an order directing the company to pay the sum due, or for any loss or damage incurred as a result of the non-payment, and for such other orders as the Tribunal may deem fit.
Section 76A, inserted into the Act as the punishment provision for contraventions of section 73 or section 76, sets the consequences:
| Who | Consequence under section 76A |
|---|---|
| The company | In addition to repaying the deposit and interest due, a fine of not less than one crore rupees or twice the amount of deposit accepted, whichever is lower, extending to ten crore rupees |
| Every officer in default | Imprisonment which may extend to seven years and a fine of not less than twenty-five lakh rupees, extending to two crore rupees |
The proviso to section 76A adds a further exposure. Where it is proved that the officer in default contravened the provisions knowingly or wilfully with the intention to deceive the company, its shareholders, depositors, creditors or the tax authorities, they are liable for action under section 447.
The dividend consequence people miss
Section 123(6) attaches a completely separate penalty to a deposits default, and it is the one that shows up in a company's disclosures rather than in a court file. A company which fails to comply with sections 73 and 74 shall not, so long as the failure continues, declare any dividend on its equity shares.
That makes a live deposits default visible from the dividend column, without any deposits filing being read at all.
- Eligible company for public deposits covers section 76, the narrow route by which a public company may take deposits from non-members.
- Interim dividend vs final dividend covers section 123, including the sub-section that bars a dividend during a deposits default.
- Section 127 failure to pay dividend is the enforcement provision on the dividend side.
- What is fraud under section 447 is the provision the proviso to section 76A routes a knowing contravention into.
- What is the National Company Law Tribunal is the forum a depositor applies to under section 73(4).
Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.
Frequently asked questions
What is a deposit under the Companies Act, 2013?
Section 2(31) defines deposit to include any receipt of money by way of deposit or loan or in any other form by a company, but not to include such categories of amount as may be prescribed in consultation with the Reserve Bank of India. The definition is inclusive, so the label a company puts on a receipt does not govern. Source: Companies Act, 2013, section 2(31).
Can a company accept deposits from the public?
Not outside Chapter V. Section 73(1) is drafted as a prohibition: no company shall invite, accept or renew deposits under the Act from the public except in a manner provided under that Chapter. Its proviso excepts banking companies, non-banking financial companies, and companies the Central Government specifies after consulting the Reserve Bank of India. Source: Companies Act, 2013, section 73(1).
What is the deposit repayment reserve account?
A separate account in a scheduled bank required by section 73(2)(c). On or before the thirtieth day of April each year, the company must deposit into it not less than twenty per cent of the deposits maturing during the following financial year. Section 73(5) bars its use for any purpose other than repayment of deposits. Source: Companies Act, 2013, sections 73(2)(c) and 73(5).
What happens to dividends if a company defaults on deposits?
The dividend stops. Section 123(6) provides that a company which fails to comply with sections 73 and 74 shall not, so long as such failure continues, declare any dividend on its equity shares. The bar runs for as long as the failure does, and needs no separate order. Source: Companies Act, 2013, section 123(6).
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