PROCEDURE OF ACCEPTANCE OF DEPOSITS FROM MEMBERS

A company may, pass a resolution in general meeting and subject to such rules in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security for the repayment of such deposits with interest, as may be agreed upon between the company and its members.

The procedure to accept deposits from members can be summarized as under:

  • The company shall convene a Board meeting to consider and approve the business to propose and accept deposits from members and decide the day, date, time, and place of the general meeting.
  • Company shall Issue notice of the general meeting to the members of the company.
  • The company shall hold the general meeting and pass a resolution for acceptance of deposits.
  • The company shall comply with the Rules prescribed in consultation with RBI and terms and conditions mutually agreed by the company and deposit holders either for acceptance or for repayment of deposits.
  • Company shall issue circular to the members including a statement showing the financial position, the credit rating obtained the total number of depositors and the amount due towards depositors in respect of any previous deposits. These details indicate the soundness of the company or a warning about the risks involved. The circular shall be published at least once in the English language in a leading English newspaper and in vernacular language having wide circulation in the State in which the registered office of the company is situated.
  • The company shall file the copy of circular in the Form DPT-1 along with a statement with the Registrar within 30days before the date of the issue of circular.
  • In case, a company does not secure the deposits or secures such deposit partially, then, the deposits shall be termed as “unsecured deposits” and shall be so quoted in every circular, form, advertisement, or any document related to invitation or acceptance of deposits.
  • The company shall provide for security by way of a charge on its assets for the due repayment of the amount of deposit and interest thereon. The company shall submit FormCHG-1 with the Registrar of companies for assets other than intangible assets. Secured deposits including interest thereon can in no case exceed the market value of the charged assets assessed by the registered valuer.
  • Company shall after the expiry of 30 days of filing Form DPT-1, the circular in Form DPT-1 along with application form is sent to all members by registered post with acknowledgment due/speed post/electronic mail.
  • The company shall collect the duly signed application form along with money from the members.
  • The company shall issue receipts of deposits within 21 days of the receipts of money/realization of cheque.
  • The company shall maintain a register of deposits at its registered office which shall contain the details from the date of such acceptance.
  • The company shall pay interest as per the rate proposed on agreed terms.
  • Company shall deposit such sum which shall not be less than 20% of the number of its deposits maturing during the financial year and the financial year next following and keep it in a separate bank account called “deposit repayment reserve account”.
  • Certification that the Company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits and where a default had occurred, the company made good the default and a period of 5 years had elapsed since the date of making good the default.
  • The company shall submit the return of deposits in Form DPT-3 on or before 30th June each year for information as on31st March of the respective year.

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