• Small depositors are persons who have deposited in a year amounts not exceeding Rs. 20,000 as deposits with a Company.

• Companies, including NBFCs are required to report on monthly basis of the default in repayment of deposits of small depositors. The Tribunal may take suo motu action against such defaulting companies and pass orders in this regard.

• Companies that make default to small depositors in respect of their deposits cannot accept further deposits from small depositors.

Depositors can make nomination in the manner provided in sections 109A/B in respect of their deposits.

Companies that default in repaying deposits suffer several disabilities such as prohibition in making inter-corporate loans and investments, buy-back of shares, among others.

Companies (Acceptance of Deposits) Rules, 1975 – important features

1. Several sources and types of deposits excluded from definition and hence not covered by these rules. Important of such exclusions are:-

1. Deposits from government, local authority and from foreign government or authority, and foreign citizens and persons.

2. Deposits from specified banks and financial institutions.

3. Deposits from other companies.

4. Security deposits from employees.

5. Deposits from its shareholders or directors or relatives of directors.

6. Deposits against security of specified types.

2.  All inclusive brokerage between 1 and 2% depending upon term of deposits can be paid. 

3.  Limits of acceptance of deposits:

as % of paid-up capital and free reserves* as per latest audited balance Sheet
(1) Short-term deposit for a period of 3 or more months	10
(2) Deposit from shareholders in case of public company or deposits guaranteed by Directors or deposits against unsecured debentures	10
(3) Public deposits	25

* Free reserves do not include – reserve created for payment of future liability for depreciation or for bad debts or created by revaluation of assets.

4. The term of deposits, generally, cannot be less than six months and more than thirty-six months. Short-term deposits payable not earlier than three months can however be accepted to the extent of 10% of "net worth".

5. Companies accepting deposits need to maintain unencumbered "liquid assets" in specified type of securities/ accounts to the extent of 15% of deposits that would mature in that financial year. To be used only for repaying such deposits but even after such use, such liquid assets shall not fall below 10% of the remaining maturing deposits during that financial year.

6. Advertisement containing prescribed disclosures has to be made for invitation of deposits. Where deposits are accepted without invitation, a statement in lieu of advertisement has to be filed.

7. If deposits are matured and are claimed but not paid, a penal interest of 18% would be charged for the period of delay. For delay to small depositors, the penal interest is 20%.

8. Annual returns with certificate from auditors in prescribed forms has to be filed with the Registrar of Companies by 30th June of each year with a copy sent to the Reserve Bank of India.