Terms, Conditions and Procedure for Acceptance of Deposits | 12th HSC Secretarial Practice (S.P.) Chapter 5

The questions on Terms and Conditions for Acceptance of Deposits, Procedure for Accepting Deposits from the Public (and from Members), and Who Can Accept Deposits (Eligible Public Company) are the most important 4-mark brief questions from Maharashtra State Board (MSBSHSE) 12th Standard HSC Secretarial Practice (S.P.) Chapter 5: Deposits. Since Chapter 5 has no Distinguish Between or Letter Writing questions, it is heavily tested in Question 5 (Answer in Brief - 4 Marks), Question 3 (Case Study - 3 Marks), and Question 6 (Justify Statements - 4 Marks). Below are the complete, textbook-accurate solutions strictly aligned with the latest Balbharati Textbook.

Board Examiner Marking Scheme (4 Marks):
1. Meaning of Deposit & Governing Sections (Sections 73 to 76): 1 Mark
2. Any 4 to 5 Terms & Conditions OR Procedural Steps: 3 Marks
Topper's Tip: Memorize the key statutory numbers from Chapter 5: Net Worth ≥ Rs. 100 Crore OR Turnover ≥ Rs. 500 Crore (for Eligible Public Company), 6 to 36 Months tenure, 20% Deposit Repayment Reserve, and 21 Days for Deposit Receipt!

Part A: Who Can Accept Deposits & Maximum Ceiling Limits

All companies accepting deposits must comply with the provisions of Sections 73 to 76 of the Companies Act, 2013, the Companies (Acceptance of Deposits) Rules, 2014, and Directives of the RBI. Note that Banking Companies, NBFCs, and Housing Finance Companies are exempted from these provisions. The remaining companies are divided into three categories showing who can accept deposits from Members vs. the Public:

Type of Company	From Whom Can It Accept Deposits?	Maximum Ceiling Limit (% of Paid-up Capital + Free Reserves)
1. Private Company	Only from its Members, Directors, or Relatives of Directors (Cannot accept from Public).	Up to 100% of aggregate of Paid-up Share Capital and Free Reserves.
2. Public Company (Other than Eligible)	Only from its Members or Directors (Cannot accept from Public).	Up to 25% of aggregate of Paid-up Share Capital and Free Reserves.
3. Eligible Public Company (Net Worth ≥ Rs. 100 Cr OR Turnover ≥ Rs. 500 Cr)	From BOTH its Members AND the General Public.	• From Members: Up to 10% • From Public: Up to 25% (Total = 35%)
4. Government Company	From the General Public.	Up to 35% of aggregate of Paid-up Share Capital and Free Reserves.

What is an Eligible Public Company? (2-Mark Concept):
An Eligible Public Company is a public company having either:
(a) A Net Worth of not less than Rs. 100 Crores, OR
(b) A Turnover of not less than Rs. 500 Crores,
and which has obtained prior approval of its shareholders through a Special Resolution for accepting public deposits.

Part B: Terms and Conditions for Acceptance of Deposits

A company accepting deposits from its members or the public must fulfill the following statutory terms and conditions (Write any 5 to 6 points in the exam for 4 Marks):

Period / Tenure of Deposit (6 to 36 Months): No deposit can be accepted or renewed which is to be repaid within a period of less than 6 months or more than 36 months (3 years). However, under certain circumstances, a company may accept short-term deposits repayable earlier than 6 months (but not earlier than 3 months) to meet its short-term needs, provided such deposits do not exceed 10% of the aggregate of paid-up share capital and free reserves.
No Demand Deposits: A company cannot accept or renew deposits repayable on demand (like a bank savings account).
Secured or Unsecured Deposits: A company has to clearly mention in its Circular or Advertisement whether the deposits being invited are Secured or Unsecured. If it offers Secured Deposits, it has to create a charge on its tangible assets within 30 days of acceptance of deposits.
Application Form: A company has to provide an application form to the intending depositor. The application form must contain a declaration by the applicant that the money he is depositing is not borrowed from any other person.
Joint Names (Maximum 3): A company can accept deposits in joint names of depositors, but there should not be more than 3 joint-holders.
Nomination: Every depositor at any time has the right to nominate any person as nominee in the event of death of the depositor.
Circular or Advertisement (Form DPT-1): If a company invites deposits from its members, it issues a Circular. If an Eligible Public Company invites deposits from the public, it has to publish an Advertisement (in Form DPT-1) in one leading English newspaper and one vernacular newspaper. The Circular/Advertisement is valid for 6 months from the end of the financial year in which it is issued or the date on which the AGM is held, whichever is earlier.
Appointment of Deposit Trustee & Trust Deed (Form DPT-2): When issuing secured deposits, an Eligible Company and a Public Company have to appoint one or more Deposit Trustees. They execute a contract called a "Deposit Trust Deed" (in Form DPT-2) at least 7 days before issuing the circular or advertisement.
Obtain Credit Rating: Every company has to get credit rating of its deposits from a recognized Credit Rating Agency (e.g., CRISIL, CARE) every year during the tenure of the deposits and include it in the circular/advertisement.
Open Deposit Repayment Reserve Account (Minimum 20%): Every company accepting deposits has to open a dedicated bank account in a scheduled bank called the "Deposit Repayment Reserve Account". Every year, on or before 30th April, the company has to deposit an amount not less than 20% of the amount of deposits maturing during the current financial year.
Deposit Receipt (Within 21 Days): The company has to issue a Deposit Receipt to the depositors within 21 days from the date of receipt of money or realization of cheque. The receipt must be signed by an officer duly authorized by the Board of Directors.
Register of Deposits: A company has to maintain a separate Register of Deposits at its Registered Office. The details of deposits accepted or renewed must be entered in this register within 7 days from the date of issue of the Deposit Receipt.
Return of Deposit (Form DPT-3 by 30th June): A company has to file a "Return of Deposit" in Form DPT-3 with the Registrar of Companies (RoC) on or before 30th June every year, giving details of deposits as on 31st March of that year.
Interest & Penal Interest (18%): The maximum rate of interest on deposits is prescribed by the RBI. In case of premature repayment, the company deducts 1% interest from the rate payable. If the company fails to repay the deposit on maturity, it has to pay a penal rate of interest of 18% p.a. for the overdue period.

Part C: Procedure for Accepting Deposits from the Public

Only an Eligible Public Company and a Government Company can accept deposits from the public. They must follow these 12 chronological steps:

Hold Board Meeting: Hold a Board Meeting to pass a resolution to accept deposits from the public (deciding the amount, terms, and date of General Meeting).
Hold General Meeting (Special Resolution): Hold a General Meeting of shareholders to obtain their approval by passing a Special Resolution. File the resolution with the RoC (and RBI, if needed) within 30 days.
Hold Board Meeting to Approve Advertisement: Hold a Board Meeting to approve the draft of the Advertisement (in Form DPT-1) for inviting deposits from the public. Gets it signed by the majority of Directors.
Appoint Bankers, Credit Rating Agency & Deposit Trustees: Appoint a scheduled bank to collect application forms/money, obtain a rating from a Credit Rating Agency, and appoint one or more Deposit Trustees. Execute the Deposit Trust Deed (Form DPT-2) at least 7 days before issuing the advertisement.
Take Deposit Insurance: Enter into an agreement with an insurance company for taking Deposit Insurance at least 30 days before issuing the advertisement (if required).
File a Copy of Advertisement with RoC: File a copy of the signed advertisement with the Registrar of Companies (RoC).
Publish Advertisement to Public (After 30 Days): Publish the advertisement in one English newspaper and one vernacular newspaper having wide circulation in the State where the company's Registered Office is located (after 30 days of filing it with the RoC) and upload it on the company's website.
Collect Application Forms and Money: The appointed banker collects the application forms along with the deposit money and informs the company.
Issue Deposit Receipt (Within 21 Days): The company scrutinizes the applications and issues the Deposit Receipt within 21 days from the date of receipt of money or realization of cheque.
Create Charge on Assets (Within 30 Days): For secured deposits, create a charge on tangible assets within 30 days of acceptance.
Make Entries in Register of Deposits (Within 7 Days): Enter the particulars in the Register of Deposits within 7 days from the date of issuance of the Deposit Receipt.
File Return of Deposits with RoC (By 30th June): File the Return of Deposits (Form DPT-3) before 30th June every year (having details as on 31st March).

Note on Procedure for Accepting Deposits from Members:
The procedure for accepting deposits from Members is identical, except that in Step 2 an Ordinary Resolution (or Special Resolution) is passed, and instead of publishing a newspaper Advertisement, a Circular (in Form DPT-1) is sent to all members by Registered Post, Speed Post, or Email!

Quick Memory Trick to Remember the Numbers in Chapter 5

Memory Shortcut (Chapter 5 Number Ladder — "6-36, 7, 20%, 21, 30"):
• 6 to 36 Months: Minimum & Maximum Tenure of Deposits (Short-term: Min. 3 months up to 10%)
• 7 Days: Execute Deposit Trust Deed (7 days before Advt.) & Enter in Register of Deposits (within 7 days of Receipt)
• 20% by 30th April: Deposit Repayment Reserve Account
• 21 Days: Issue Deposit Receipt to Depositor
• 30 Days: Publish Advt. after filing with RoC (30 days) & Create Charge on Assets (within 30 days)
• 30th June: File Return of Deposit (Form DPT-3)