Rules 1 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.
Rule 1 says which companies the Deposit Rules govern. Rule 2(1)(c) defines "deposit" very widely, any receipt of money "by way of deposit or loan or in any other form", and then carves out exceptions. This article covers rule 1 and the first seven exceptions, sub-clauses (i) to (vii); the rest of rule 2 is in part 2. It states the text as amended up to G.S.R. 663(E) dated 29 August 2022 per the MCA e-book; later amendments should be checked.
A "deposit" is any receipt of money by way of deposit or loan or in any other form by a company, unless it falls in a listed exception. The first seven exceptions are money from Governments and statutory authorities, foreign sources under FEMA, bank and financial institution loans, commercial paper, money from another company, and share application money held pending allotment. If share application money is not allotted within sixty days and not refunded within a further fifteen days, it becomes a deposit. See section 73 for the Act.
Rule 1: scope and commencement
Rule 1 is the short title (the Companies (Acceptance of Deposits) Rules, 2014), notified as G.S.R. 256(E) on 31 March 2014 under clause (31) of section 2, section 73 and section 76 read with section 469, in consultation with the Reserve Bank of India, and in force on 1 April 2014. The notification supersedes the Companies (Acceptance of Deposits) Rules, 1975 and any other rules under the Companies Act, 1956 on matters covered here, except for things done before that. The 1956 Act and the 1975 Rules are quoted as printed; the reader should check the current law.
Under rule 1(3) the rules apply to a company other than:
- a banking company;
- a non-banking financial company, as defined in the Reserve Bank of India Act, 1934, registered with the Reserve Bank of India;
- a housing finance company registered with the National Housing Bank established under the National Housing Bank Act, 1987; and
- a company specified by the Central Government under the proviso to section 73(1).
For the Act's own prohibition and the repayment provisions, see our posts on section 73 and sections 74 and 75. The rule-set guide maps every rule.
Rules 2(1)(a) and (b)
"Act" means the Companies Act, 2013, and "Annexure" means the Annexure attached to the rules. The substantive definition is clause (c).
Rule 2(1)(c): the definition
"Deposit" includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include the items below. Everything turns on whether a receipt fits one of the exceptions; if it does not, it is a deposit. Rule 2(1)(c) also has an Explanation, covered in part 2, that treats certain promises of returns as deposits. For a company that thinks it may have taken deposits, our DPT-3 return of deposits service can review the position.
The first seven exceptions
| Sub-clause | Receipt that is not a deposit |
|---|---|
| (i) | Any amount received from the Central or a State Government, or from any other source whose repayment is backed by a guarantee of the Central or a State Government, or from a local authority, or from a statutory authority constituted under an Act of Parliament or a State Legislature. |
| (ii) | Any amount received from foreign Governments, foreign or international banks, multilateral financial institutions (the rule names the International Finance Corporation, the Asian Development Bank, the Commonwealth Development Corporation and the International Bank for Industrial and Financial Reconstruction, "including, but not limited to"), foreign Government-owned development financial institutions, foreign export credit agencies, foreign collaborators, foreign bodies corporate and foreign citizens, foreign authorities or persons resident outside India, subject to the Foreign Exchange Management Act, 1999 and its rules and regulations. |
| (iii) | Any amount received as a loan or facility from a banking company, the State Bank of India or any of its subsidiary banks, a banking institution notified by the Central Government under section 51 of the Banking Regulation Act, 1949, a corresponding new bank under the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980, or a co-operative bank as defined in the Reserve Bank of India Act, 1934. |
| (iv) | Any amount received as a loan or financial assistance from Public Financial Institutions notified by the Central Government in consultation with the RBI, regional financial institutions, insurance companies or scheduled banks as defined in the RBI Act, 1934. |
| (v) | Any amount received against issue of commercial paper or any other instruments issued in accordance with RBI guidelines or notification. |
| (vi) | Any amount received by a company from any other company. |
| (vii) | Any amount received and held pursuant to an offer made in accordance with the Act towards subscription to any securities, including share application money or advance towards allotment pending allotment, so long as it is appropriated only against the amount due on allotment of the securities applied for. |
The Acts named are quoted as printed; check their current texts, as the reader should for every old statute in the rules. Sub-clause (vi) is very short. It says any amount received "from any other company". A loan from a sister or holding company therefore falls within it as the text reads, though the other company's own position is a separate matter. Our post on loans to a private company from directors, members and relatives deals with the lender types that sub-clause (vi) does not cover.
The Explanation to sub-clause (vii): sixty days and fifteen days
The Explanation says, "without prejudice to any other liability or action":
- (a) if the securities for which application money or an advance was received cannot be allotted within sixty days from the date of receipt, and the money is not refunded within fifteen days from the date of completion of the sixty days, the amount is treated as a deposit under these rules; and
- (b) any adjustment of the amount for any other purpose is not treated as a refund.
A proviso to clause (a), inserted in 2015, dealt with amounts received before 1 April 2014 and disclosed in the balance sheet for the year ending on or before 31 March 2014, where allotment was still pending on 31 March 2015: the company was to return the money, allot, or comply with the rules by 1 June 2015. That date has passed; it matters only for old records. The proviso refers to the Companies Act, 1956 and the Securities and Exchange Board of India Act, 1992 as printed; check the current law.
Example
Orbit Components Private Limited takes a loan from a scheduled bank (sub-clause (iv)), a foreign collaborator's advance subject to FEMA (sub-clause (ii)) and a loan from a group company (sub-clause (vi)). None of these is a deposit under the rule. It also receives share application money from a new investor. If the shares are not allotted within sixty days, and the money is not refunded within the following fifteen days, the amount becomes a deposit. Adjusting it against an old dues balance would not count as a refund.
Need help with deposit classification?
Whether a receipt is a deposit decides whether the company must file a return and follow the repayment rules. If you want your loans, advances and application money reviewed against the exceptions, see our DPT-3 return of deposits service.
Key takeaways
- A deposit is any receipt of money by way of deposit, loan or otherwise, unless excluded.
- Government, statutory authority, foreign-source, bank, financial institution, commercial paper and inter-company receipts are excluded in sub-clauses (i) to (vi).
- Share application money is excluded only while held pending allotment and appropriated against allotment dues.
- Sixty days to allot, plus fifteen days to refund, or the money is treated as a deposit; adjustment is not a refund.
- Banks, registered NBFCs, registered housing finance companies and specified companies are outside the rules.
Read next
- Rule 2: exempted receipts, part 2 (directors, promoters, start-ups)
- Rule 3: terms of deposits, period, limits and interest
- Deposit exemptions under the rules: members, directors and debentures
- Companies (Acceptance of Deposits) Rules, 2014: guide
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.