Loans explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A loan to a private company is a "deposit" under the Act unless one of the exclusions in rule 2(1)(c) of the Deposit Rules covers it. The answer turns on who lent the money, on what terms and with what paperwork. This guide goes lender by lender, as per the Companies Act, 2013 in the Ministry's consolidated text (last updated 29 July 2022) and the Rules as consolidated in the Ministry's e-book, consulted on 3 October 2026. Later amendments should be checked.
Section 2(31) and rule 2(1)(c) treat "any receipt of money by way of deposit or loan or in any other form" as a deposit, unless excluded. A loan from a director, or a relative of a director of a private company, is excluded if the lender gives a written declaration that the money is not out of funds he borrowed or took as loans or deposits from others, and the company discloses it in the Board's report. Other exclusions turn on the lender or the purpose. Form DPT-3 is filed yearly with an auditor's declaration.
The starting point
Section 2(31) says "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 as may be prescribed in consultation with the Reserve Bank of India. Section 73(1) prohibits a company from inviting, accepting or renewing deposits from the public except as the Chapter provides, and section 73(2) lets a company accept deposits from its members under the conditions it prints. Section 76 deals with public companies; it is mentioned here only for contrast.
Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 repeats the definition and lists what it does not include. If you want the legal team to check a loan file, see our DPT-3 service.
Lender by lender
| Lender | What rule 2(1)(c) prints | Condition |
|---|---|---|
| Director, or relative of a director of a private company | Clause (viii): excluded | Written declaration at the time of giving the money that it is not given out of funds acquired by borrowing or accepting loans or deposits from others; details disclosed in the Board's report |
| Member of the company | No separate exclusion printed | Acceptance falls under section 73(2) and rule 3 if it is a deposit |
| Another company (including a sister company) | Clause (vi): "any amount received by a company from any other company" | None printed in the clause |
| Partnership firm or LLP | No separate item for a firm or an LLP | The text prints no separate exclusion; the clauses on banks, financial institutions and other categories apply only to the lenders they name |
| Bank, public financial institution, insurance company, scheduled bank | Clauses (iii) and (iv) | As the clauses describe |
| Promoters, unsecured loan stipulated by a lending bank or institution | Clause (xiii) | Brought in on the lender's stipulation, from promoters or their relatives, and only until the institution's or bank's loans are repaid |
| Persons outside India | Clause (ii) | Subject to the Foreign Exchange Management Act, 1999 and rules under it |
| Trade advances | Clause (xii)(a) | Advance for supply of goods or services appropriated within three hundred and sixty five days |
A loan from a member who is not a director is therefore not within clause (viii). If it is a deposit, the company is in section 73(2) territory: a resolution in general meeting, a circular filed with the Registrar and the other conditions, within the limits in rule 3, discussed in our guide on deposits from members of a private company.
Rule 3: limits and period
Rule 3(1)(a) says deposits are not to be repayable in less than six months or more than thirty-six months from acceptance, with a short-term proviso for amounts up to ten per cent of the aggregate of paid-up share capital, the reserves defined in section 2(43) and securities premium account, repayable not earlier than three months. Rule 3(3) caps member deposits at thirty five per cent of that aggregate, but its first proviso allows a private company to accept up to hundred per cent and to file the details in Form DPT-3, and its second proviso lifts the maximum for a private company that is a start-up (for ten years from incorporation) or that meets the three conditions printed. Rule 3(6) bars a rate of interest or brokerage above the maximum prescribed by the Reserve Bank of India for NBFC deposits; the rule prints no figure. Rule 17 prescribes a penal rate of eighteen per cent a year for the overdue period on matured and claimed deposits that remain unpaid.
What DPT-3 must show
Rule 16 says every company to which the rules apply shall file Form DPT-3 on or before 30 June each year, furnishing the information as on 31 March of that year, duly audited by the auditor, with a declaration to that effect by the auditor in Form DPT-3. The Explanation says Form DPT-3 is used for the return of deposits, for the particulars of transactions not considered as deposits, or both, by every company other than a Government company. In effect, an exempt receipt such as a director's loan is reported as a transaction not considered a deposit. Rule 16A(2) requires a private company to disclose in the notes to its financial statements the money received from directors or relatives of directors. For how the return is filed, see our DPT-3 filing guide. The rule 16A(3) one-time return covers a past period (1 April 2014 to 31 March 2019) and is not repeated here.
If the rules are contravened and the Act prints no punishment, rule 21 prescribes a fine which may extend to five thousand rupees and a further fine of up to five hundred rupees per day for a continuing contravention.
Worked example (invented names and figures)
Zeta Retail Private Limited receives Rs 8,00,000 from its director Anil Das and Rs 3,00,000 from a sister company, Zeta Logistics Private Limited. Anil gives a written declaration at the time that the money is from his own funds, not borrowed. Result: the director's amount is excluded under clause (viii), is disclosed in the Board's report and the notes, and is reported in Form DPT-3 as a transaction not considered a deposit. The sister company's Rs 3,00,000 is excluded under clause (vi). Both go in the return's particulars of non-deposit transactions as the form requires. Total reported: 8,00,000 + 3,00,000 = Rs 11,00,000.
Frequently asked situations
- A relative of a director lends. Clause (viii) covers a relative of a director of a private company, subject to the same written declaration and disclosure.
- A sister company lends. Clause (vi) excludes any amount received from any other company.
- Interest is paid on the loan. Rule 3(6) caps interest for companies falling under it; for other receipts, the loan terms govern. For tax on interest, see our income-tax guides.
- The auditor's role. Rule 16 requires the information in DPT-3 to be duly audited, with the auditor's declaration in the form.
Common mistakes
- Taking a director's loan without the written declaration at the time of giving the money.
- Forgetting to mention it in the Board's report and the notes.
- Treating a member's loan as exempt.
- Missing the 30 June filing date for DPT-3.
- Reporting a loan from a firm or an LLP as exempt without checking it fits a printed clause.
Need help with director loans and DPT-3?
We can check each loan against rule 2(1)(c), prepare the declarations and file the return. See our DPT-3 return of deposits service.
Key takeaways
- Every loan is a deposit unless a clause of rule 2(1)(c) excludes it.
- A director's or director's relative's loan to a private company needs a written declaration and Board's report disclosure.
- Other companies' amounts are excluded under clause (vi).
- DPT-3 is due on or before 30 June, audited, with the auditor's declaration.
- Private companies disclose such money in the notes (rule 16A(2)).
Read next
- Funding Options for a Private Limited Company
- Converting a Loan Into Equity Shares Under Section 62(3)
- Sections 185 and 186: Loans, Guarantees and Security to Group Companies
- Deposit Exemptions Under the Rules
Disclaimer: Based on the Companies Act, 2013 in the Ministry of Corporate Affairs consolidated text (last updated 29 July 2022), the Rules as consolidated in the Ministry's e-book and the other official texts named in this article, as consulted on 3 October 2026. Later amendments, notifications, circulars, forms and fees should be checked. Formats are general drafts to be adapted to the company's articles and facts. This article is general information, not legal advice; check the official text before acting.