The General Prohibition and Acceptance of Deposits from Members — Section 73

Section 73(1) of the Companies Act, 2013 lays down a blanket prohibition: no company shall invite, accept, or renew deposits from the public except in accordance with the manner provided in this Chapter (Sections 73 to 76A of the Act) and the rules made under it. The word 'public' here is deliberately broad — in the absence of a specific carve-out, it covers not only outsiders with no existing relationship to the company but the company's own members as well. This blanket prohibition does not apply to a banking company, a non-banking financial company registered with the Reserve Bank of India, a housing finance company registered with the National Housing Bank, and certain other companies the Central Government may notify — these entities already operate under the RBI's or NHB's own prudential deposit-taking regulation, and so are kept outside the Companies Act's separate deposit regime altogether.

For every other company, Section 73(2) carves out the first, narrower exception to the Section 73(1) prohibition: a company MAY accept deposits from its own MEMBERS, subject to passing a resolution in a general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India. Because the money is coming from people who are already members of the company — with, in principle, greater access to its affairs and financial position than a stranger from the public would have — the law permits this without the far more elaborate machinery (special resolution, credit rating, eligible-company threshold) that Section 76 imposes on deposits invited from the public at large. Even so, Section 73(2) is not a bare permission: before accepting or renewing any deposit from members, a company must satisfy each of the following conditions together, not any one in isolation — (a) issue a circular to its members, in the manner prescribed in Form DPT-1, including a statement of the company's financial position, the credit rating obtained (where applicable), the total number of depositors, and the amount due towards deposits already accepted; (b) file a copy of that circular with the Registrar of Companies within thirty days before the date the circular is issued; (c) maintain a Deposit Repayment Reserve Account, depositing or investing, on or before the 30th of April every year, a sum not less than twenty per cent of the deposits maturing during the following financial year; (d) certify that the company has not defaulted in repaying deposits accepted before or after the commencement of the Act, or interest on them, or that any past default has been made good and five years have elapsed since; (e) provide such deposit insurance as the rules prescribe, where available; (f) where the deposits are secured, create a charge on the company's assets of a value sufficient to cover the deposits and interest due, within thirty days of accepting them; and (g) appoint one or more trustees for depositors, executing a deposit t …