Rule 3 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 3 sets the terms on which a company may accept or renew deposits, and any compliance advisory review of deposits starts here: the minimum and maximum period, joint names, how much can be taken from members and from others, the cap on interest and brokerage, no later change of terms to the depositor's prejudice and an annual credit rating for eligible companies. This article states the rule as amended up to G.S.R. 663(E) dated 29 August 2022 per the MCA e-book; later amendments should be checked.
A company covered by section 73(2), or an eligible company, may not accept or renew a deposit repayable in less than six months or more than thirty-six months, except short-term deposits of up to ten per cent of the base figure. Deposits from members are capped at thirty five per cent of paid-up share capital, distributable reserves (the Act's defined term) and securities premium; an eligible company has separate caps of ten per cent and twenty-five per cent. Private companies and specified IFSC public companies have a different, wider rule for members' money. Interest and brokerage cannot exceed the RBI maximum for NBFC deposits. See section 73 for the Act.
Period of deposits: sub-rule (1)
On and from the commencement of the rules, no company referred to in section 73(2) and no eligible company shall accept or renew any deposit, secured or unsecured, which is repayable on demand or on notice within a period of less than six months or more than thirty-six months from the date of acceptance or renewal.
A proviso lets a company meet short-term funding needs by accepting or renewing deposits repayable earlier than six months, provided that (a) such deposits do not exceed ten per cent of the aggregate of paid-up share capital, distributable reserves (the Act's defined term; the rule uses that term) and securities premium account, and (b) they are repayable not earlier than three months from the date of deposit or renewal. For the meaning of "eligible company", see our article on rule 2 part 2.
Joint names: sub-rule (2)
Where depositors so desire, deposits may be accepted in joint names, not exceeding three, with or without any of the clauses "Jointly", "Either or Survivor", "First named or Survivor" or "Anyone or Survivor".
Limits on deposits: sub-rules (3) to (5)
| Who | Limit as printed |
|---|---|
| Company under section 73(2), deposits from members (3) | Deposits from members, with other deposits outstanding on the date of acceptance or renewal, must not exceed thirty five per cent of the aggregate of paid-up share capital, distributable reserves (the Act's defined term) and securities premium account. The figure was twenty five per cent until a 2016 amendment. |
| Eligible company, deposits from members (4)(a) | With deposits from members outstanding on the date, not more than ten per cent of the same aggregate. |
| Eligible company, other deposits (4)(b) | With such other deposits outstanding (excluding member deposits in (a)), not more than twenty-five per cent of the same aggregate. |
| Government company eligible under section 76 (5) | With other deposits outstanding on the date, not more than thirty five per cent of the same aggregate. |
Relief for private companies and specified IFSC public companies
The proviso to sub-rule (3) is the part that matters most for private companies:
- First proviso. A Specified IFSC Public company and a private company may accept from members monies not exceeding hundred per cent of the aggregate of paid-up share capital, distributable reserves (the Act's defined term) and securities premium account, and must file the details of the monies so accepted with the Registrar in Form DPT-3. The Explanation defines a Specified IFSC Public company as an unlisted public company licensed to operate by the RBI, SEBI or IRDAI from the International Financial Services Centre in an approved multi services Special Economic Zone under the Special Economic Zones Act, 2005, read with the Special Economic Zones Rules, 2006. These references are quoted as printed; check the current law.
- Second proviso. The maximum limit for deposits from members does not apply to two classes of private company: (i) a private company that is a start-up, for ten years from the date of incorporation; and (ii) a private company that meets all of: (a) it is not an associate or subsidiary of any other company; (b) its borrowings from banks, financial institutions or any body corporate are less than twice its paid-up share capital or fifty crore rupees, whichever is less; and (c) it has not defaulted in repayment of such borrowings subsisting when it accepts deposits under section 73.
- Third proviso. All companies accepting deposits file the details of monies so accepted with the Registrar in Form DPT-3.
The start-up period was five years until the substitution of "ten years" on 7 September 2020. The e-book also records that the proviso, with the IFSC wording, was substituted on 19 September 2017. For loans from directors and relatives, which sit outside the "deposit" definition if the conditions are met, see our post on loans to a private company from directors, members and relatives.
Interest and brokerage: sub-rule (6)
No company referred to in section 73(2), and no eligible company, shall invite, accept or renew any deposit in any form carrying a rate of interest, or pay brokerage on it, at a rate exceeding the maximum rate of interest or brokerage prescribed by the Reserve Bank of India for acceptance of deposits by non-banking financial companies. The rule prints no rate; those rates are set by the RBI and are not stated here. The Explanation says the person authorised in writing by the company to solicit deposits, and through whom deposits are actually procured, alone may receive brokerage; payment of brokerage to any other person for procuring deposits is deemed a violation of the rules.
No change of terms to the depositor's prejudice: sub-rule (7)
The company shall not reserve to itself, directly or indirectly, a right to alter, to the prejudice or disadvantage of the depositor, any of the terms and conditions of the deposit, the deposit trust deed or the deposit insurance contract after the circular (or circular in the form of advertisement) is issued and deposits are accepted.
Credit rating: sub-rule (8)
(a) Every eligible company shall obtain, at least once in a year, a credit rating for deposits accepted by it, and send a copy of the rating to the Registrar of Companies with the return of deposits in Form DPT-3. (b) The rating shall not be below the minimum investment grade rating or other specified credit rating for fixed deposits, from any one of the approved credit rating agencies as specified for NBFCs in the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998, as amended from time to time. The RBI Directions are quoted as printed; check the current text.
Example
Chandan Retail Private Limited, a private company that is not a subsidiary, has bank borrowings below the lower of twice its paid-up share capital and fifty crore rupees and no defaults. The member-deposit limit does not apply to it under the second proviso, but it still files the details in Form DPT-3. A public eligible company, by contrast, keeps member deposits within ten per cent and other deposits within twenty-five per cent of the aggregate, and sends an annual credit rating with its DPT-3.
Need help with deposit limits and DPT-3?
Which limit applies depends on the type of company, who the depositors are and what is already outstanding. If you want the position checked before taking or renewing deposits, see our compliance advisory service.
Key takeaways
- Deposit period is six to thirty-six months, with a short-term proviso at ten per cent and three months.
- Members' deposits are capped at thirty five per cent for section 73(2) companies; eligible companies have ten and twenty-five per cent caps.
- Private companies and specified IFSC public companies may take up to hundred per cent from members; certain private companies are outside the cap altogether.
- Every company accepting deposits files the details in DPT-3.
- Interest and brokerage are capped by reference to RBI rates for NBFC deposits; eligible companies need an annual credit rating.
Read next
- Rule 4, 6 and 10: DPT-1 circular, security and application form
- Rules 18–22: eligible companies, penalty and forms
- Rule 2, part 1: what is a deposit
- Section 76: deposits by an eligible company
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.