Explain the following terms/concepts.

1. Eligible Public Company

Ans: (1) Eligible public company can accept deposits from members and the public.
(2) Eligible company under section 76(1) of Companies Act, 2013 means: A company having net worth* of not less than Rs one hundred crores or Turnover* of not less than Rs five hundred crores.

2. Tenure of Deposit
Ans: (1) Deposits can be accepted for a minimum period of 6 months and a maximum period of 36 months.
(2) However, for short term requirements, deposits up to 10% of the aggregate paid-up capital, free reserves, and securities premium account can be accepted for a period of less than six months but not less than three months Rule 3(2) of Companies (Acceptance of Deposits) Rules, 2014.

3. Secured Deposit
Ans: (1) A company can accept secured or unsecured deposits which should be clearly mentioned in every circular, form, advertisement, or in any document related to invitation or acceptance of deposits.
(2) If the company intends to issue Secured Deposits, it shall create security in favour of trustees within 30 days of acceptance of deposits. Trustees should ensure about the security of depositors. If there is any default in repayment, trustees should organize a meeting of depositors – Rules 6 to 8 of Companies (Acceptance of Deposits) Rules, 2014.

4. Deposit Trustee
Ans: (1) Every company inviting deposits under section 73, of Companies Act 2013, shall appoint deposit trustees for creating security for its deposits, which shall be mentioned on the circular. Written consent shall be obtained from the trustee before their appointment. 
(2) A deposit trust deed has to be signed at least 7 days before the issue of the circular. Deposit trustees cannot be removed after the issue of circular / advertisement and before the expiry of his term except with unanimous consent of all directors present at the meeting of the Board, which shall include an independent director if any.

5. Charge on tangible assets
Ans: (1) Every company accepting deposits from the public shall create a charge on its tangible assets of an amount not less than the amount of deposits accepted in favour of the deposit holders in accordance with such rules as may be prescribed.
(2) The charge should be created within 30 days from accepting the deposits. The minimum amount of security should be equal to the amount not covered by Deposit Insurance. The security is created in favour of the Deposit Trustee.

6. Deposit Insurance
Ans: (1) The company enters into an agreement with the Insurance Company for taking Deposit Insurance. A company needs to take Deposit Insurance at least 30 days before the date of the circular/advertisement or its renewal. 
(2) Insurance is to be taken if the amount of deposit plus interest is up to 20,000. Insurance above 20,000 per depositor Rs 20,000 insurance.

7. Deposit Repayment Reserve Account
Ans: (1) A sum not less than 20% of the amount of its deposits maturing during a financial year shall be deposited in a separate bank account in a scheduled bank. For this, a company has to open an account called as ‘Deposit Repayment Reserve Account’.
(2) The amount should be deposited on or before 30th April each year. The ‘Deposit Repayment Reserve Account shall be used by the company only for the purpose of repayment of deposits.

8. Credit Rating
Ans: (1) Every company accepting deposits from the public shall obtain the credit rating (including its net worth, liquidity, and ability to pay its deposits on due date) from a recognized credit rating agency.
(2) The rating shall be obtained for every year during the tenure of deposits. A copy of the credit rating shall be submitted to ROC.

9. Deposit Receipt
Ans: (1) The company has to issue a Deposit Receipt to every deposit holder within 21 days from receipt of the money or realization of cheque or date of renewal.
(2) The receipt has to be signed by the officer duly authorized by the Board of Directors. The receipt contains: The name and address of the depositor, Amount of deposit, Rate of interest payable, and Date on which it is repayable

10. Return of Deposit
Ans:(1) The company has to file annual return of deposits with Registrar before 30th June every year, with fees.
(2) The Return gives detail of deposit with the company as on 31st March of that year.