Public Deposits

Definition of Public Deposits

Public deposit is the source of fund for private and non-banking companies. It means to accept fund from public in the form of deposit. The interest on these deposits is more than interest which is given by banks and post offices.

This is the risky investment but investor can earn high return on public deposits. From June 1980, public companies of India also started to accept public deposits. More than Rs. 5000 crore has been invested by Indian Investors in public deposits.

Government Regulation on Public Deposits

 Company law 1956’s section 58- A provides the power to central govt. to make rules and regulation for controlling public deposits. Government of India has made Companies (acceptance of deposits) Rules 1975. From time to time, these rules are amended.

 Following are the main features of these rules

1. Ceiling on Deposits
A company can accepts public deposits up to following level

a) Company can accept public deposits up to the 25% of the total of payable capital and free reserves.

b) Company can accepts public deposits from existing shareholders or debenture holders up to 10% of total of payable capital and free reserves.

2. Maturity of Deposits

Company has to accept deposits from public minimum for 6 months and maximum for 3years.

3. Form and Particulars of Advertisement

Company must publish its advertisement in English news paper and in local language newspaper.

4. Form of Application for Deposits

Public deposits must be accepted on given application by depositor.

5. Register of Deposits

Like register of shareholder and debenture holder, company should record all persons’ name, address, deposit cash, date, maturity date, and rate of interest in register of deposits.

6. Interest on Deposits

Company can fix rate of interest on deposits money  according to regulations of RBI.



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Accounting Education: Public Deposits
Public Deposits
Accounting Education
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