Is the Loan a Deposit? Classifying Receipts from Shareholders, Directors and Others, and Reporting in DPT-3
This article explains how money received by a company is classified as a deposit or a non-deposit under Section 2(31) of the Companies Act, 2013 and Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014, with particular attention to loans from shareholders, and how outstanding amounts are reported in Form DPT-3.
It matters to practitioners because the label in the books does not decide the treatment, and a misclassified loan can leave a company in breach of the deposit provisions and its annual return incomplete. No amendment is discussed. The article explains the existing framework.
Q1. What does the law treat as a deposit?
Section 2(31) gives "deposit" a wide meaning that includes money received by a company by way of deposit, loan or in any other form. The Companies (Acceptance of Deposits) Rules, 2014 supplement it.
The description used in the books, whether unsecured loan, advance, temporary funding or shareholder support, does not decide the legal treatment. The nature and source of the receipt do. Money that has been received and is repayable is a deposit unless it falls within a specific exclusion in Rule 2(1)(c).
Q2. Which receipts are not deposits under Rule 2(1)(c)?
Subject to conditions, the exclusions include:
- amounts from the Central Government, a State Government, a local authority or a statutory authority;
- loans or financial assistance from a banking company;
- loans from a public financial institution;
- amounts received from another company;
- amounts from a director, with a declaration;
- amounts from a relative of a director of a private company, with a declaration;
- share application money pending allotment, if it meets the conditions;
- certain customer advances received in the ordinary course of business;
- a non-interest-bearing employee security deposit within the permitted limit; and
- certain secured or compulsorily convertible debentures.