Home / 12th Commerce / Informative Report On Public Deposit Invited By Company
public deposit invited by company, Informative Report On Public Deposit Invited By Company, HSC Projects, HSC Projects

Informative Report On Public Deposit Invited By Company


Public deposits see the unsecured deposits invited by corporations from the general public primarily to finance capital desires. A corporation’s willingness to ask public deposits makes a poster within the newspaper.

Any member of the general public will replenish the prescribed kind and deposit the cash with the corporate. The corporate reciprocally problems a deposit receipt. This receipt is an acknowledgment of the debt by the corporate. The terms and conditions of the deposit are written on the rear of the revenue. The speed of interest on public deposits depends on the amount of deposit and name of the corporate.


This project aims to make an Informative report of public deposits invited by the company.

There are many objectives for this project. Primary few goals are given below.


  •  To understand what are public deposits
  •  To know the right way to invite and accept public deposits in the company
  •  To understand the need for public deposits
  •  To know the merits and demerits of public deposits
  •  To ascertain any doubts regarding the process of the invitation of public deposit by a company


The method used to gather the required information on the project is an internet survey method. The Internet has extensive knowledge on this subject. It has a vast collection of data on public deposits. The survey has unveiled information about public deposits invited by the company. The major few points covered in this report are given below:

  • Public deposits
  • Merits and demerits of public deposits
  • Invitation and acceptance of public deposit by company


  • Public Deposit:

public deposit invited by company, Informative Report On Public Deposit Invited By Company, HSC Projects, HSC Projects

Public deposits are those deposits that are taken from the members or administrators of the corporation or the overall public at a nominal rate of interest for a nominal amount. This methodology of raising funds is changing into the standard at this time since the bank credit is changing into costlier. In keeping with the present provisions, a corporation cannot settle for any public deposit for an amount of but half-dozen months and over thirty-six months.

But to satisfy the short-run demand (i.e., assets requirements) deposits up to 100% of paid capital and free reserves minus intangible assets, accumulated losses, postponed revenue expenditure, is also accepted for an amount of 3 months.

At a similar time, on and from the first Gregorian calendar month 1979, no company will settle for or renew deposits in far more than thirty-fifth of its paid capital and free reserves as against the limit of four-hundredth up to thirty-first March 1979.

There are two strategies of funding under this method:

Cumulative deposits

Under cumulative deposits, there’s a nominal amount of your time (generally three years) at the top of that the depositors would be paid their maturity values that embody associate degree interest up to fifty-fifth of initial deposits, i.e., 18.5% pa. Interest or 15 August 1945 pa. Interest.

Fixed deposits

But underneath fixed deposit theme, payment of interest at totally different rates (generally from twelve-tone system to Sixteen Personality Factor Questionnaire p.a. in our country) is created for the amount starting from one to three years.

Shareholders or workers of the corporate are offered an additional quantity of interest, the number paid to the overall public. However, underneath each of the strategies, a minimum amount is ordered down, If there’s any deposit that is higher than that minimum level, a similar is accepted in multiples of the particular quantity that are nominal.

  • Merits and demerits of public deposit

public deposit invited by company, Informative Report On Public Deposit Invited By Company, HSC Projects, HSC Projects

Benefits of Public Deposits:

  1. Simplicity:

Public deposits are a convenient supply of business finance. No cumbersome legal formalities are concerned. The corporate raising deposits must merely offer a commercial and issue a receipt to every investor.

  1. Economy:

Interest paid on public deposits is less than that paid on debentures and bank loans. Moreover, no underwriting commission, brokerage, etc. must be paid. Interest paid on public deposits is tax-deductible that reduces liabilities. Therefore, the public deposits area unit a less expensive supply of finance.

  1. No Charge on Assets:

Public deposits are unsecured and, therefore, don’t produce any charge or mortgage on the company’s assets. The corporate will raise loans in the future against the safety of its assets.

  1. Flexibility:

Public deposits are raised throughout the season to shop for raw materials in bulk and different short wants. They’ll become back once the necessity is over. Therefore, public deposits introduce flexibility within the company’s monetary structure.

  1. Commercialism on Equity:

Interest on public deposits is paid at a hard and fast rate. This allows an organization to declare higher rates of dividend to equity shareholders during times of excellent earnings.

  1. No Dilution of Control:

There is no dilution of shareholders’ management as a result of the depositors doesn’t have any selection rights.

  1. Wide Contacts:

Public deposits change an organization to create contacts with a broader public. These contacts prove useful within the sale of shares and debentures in the future.

Demerits of Public Deposits:

  1. Uncertainty:

Public deposits are an unsure and unreliable supply of finance. The depositors might not respond once the economic conditions area unit unsure. Moreover, they will withdraw their deposits whenever they feel shaky regarding the financial health of the corporate.

Depositors are entitled to withdraw their deposits at any time once giving previous notice to the corporate. Throughout times of economic tightness or distress, the depositors might get terrified and need to withdraw their deposits.

Moreover, if an outsized variety of depositors at the same time withdraw their deposits throughout the slump, the corporate might notice it troublesome to repay a large add directly. Therefore, public deposits are represented as ‘fair-weather friends.’

  1. Limited Funds:

A restricted quantity of funds is raised through public deposits because of legal restrictions.

  1. Temporary Finance:

The maturity amount of public deposits is brief. The corporate cannot depend on public deposits for meeting long monetary wants.

  1. Speculation:

As public deposits are raised and quickly, an organization is also tempted to lift a lot of funds than it will productively use. It should keep idle cash to satisfy future contingencies. The management of the corporate might fancy over-trading and speculation that exercise harmful effects on the business.

  1. Hindrance to Growth of Capital Market:

Public deposits hamper the expansion of a healthy capital market within the country. The widespread use of public deposits creates a shortage of commercial securities.

  1. Restricted Appeal:

Public deposits don’t charm as a mode of investment to daring investors who wish capital gains. Conservative investors may additionally not like these deposits within the absence of correct security.

  1. Unsuitable for brand new Concerns:

New firms lacking in sound credit standing cannot depend on public deposits. Investors don’t wish to deposit cash with such firms.

  •  Invitation and Acceptance of public deposit by companies:

Laws & Rules applicable

  • Section 58A of the businesses Act 1956
  • Section 58AA of the Companies. Act of 1956
  • corporations (Acceptance of Deposits) Rules, 1975

Who can accept the public deposit:

A public limited company can accept public deposits. But a private limited co. cannot because of the restriction imposed by the Companies Act (Sec 3)(1)(iii)(d)


No company with an internet owned fund of .s than rupees one large integer shall invite public deposits;”

Net owned Fund” has the same meaning as assigned to it in Reserve bank of India Act, 1934

-Net owned fund suggests that –

a) the mixture of the paid-up equity capital and free reserve. disclosed within the latest record of the corporate when deducting from that place

  •  accumulated balance of loss,
  •  delayed revenue expenditure,
  •  alternative intangible assets

b) further reduced by the amounts representing –

1) Investment of such company in shares of –

  • i) its subsidiaries
  • ii)companies in the same group
  • iii) all other NBFC’s

2) the value of debentures, bonds, outstanding loans and advances (including hire purchase and lease finance) created to, and deposits with

  • i) subsidiaries of such corporations
  • ii) Companies in the same group

to the extent such quantity exceeds ten percent of (a) higher than Amount are often raised,

Period of Deposits:-

No company shall settle for or renew any deposit that is due  on-demand or on notice or when an amount of but six months or quite a factor six months from the date of acceptance or renewal of such deposit: (Comp,’ shall settle for a deposit for quite half-dozen months however but thirty-six months)

Provided that a comp, could for the aim of meeting any of its short term necessities for finds, settle for or renew, such deposits as are mentioned in Clause (i) of sub-rule (2) for compensation previous six months from the date of deposit or renewal, because the case could also be, subject to the condition that such deposit-

  • (i) shall not exceed 10 percent of the combination of the paid share capital and free
  • (ii) Three months from the date of such deposit or renewal thence, because the case could also be

Clause (i) of sub-rule (2)

(2) No company, aside from a Government company, shall settle for:

  • (a) any deposit against an unsecured debenture or
  • (b) any deposit from a stockholder or
  • (c) any deposit warranted by somebody who, at tile time of giving such guarantee could be a director of the corporate
  • If the number of made deposits exceeds 10 percent of the mixture of the paid share capital and free reserve. Of the corporate.

A form of Application for deposits.-

  1. The intending investor creates an application for the acceptance of such deposit, and such use contains a declaration by such person to the impact that the number isn’t being deposited out of the funds no inheritable by him by borrowing or exceptive deposits from the other person.
  2. The appliance shall be created within the equipped by the corporate and such type shall be amid a press release by the corporate containing all the particulars


Public deposits are the supply for meeting the asset’s desires of the corporate. Firms notice public deposits as enticing supply because of the following reasons:

  1. Its a lot of convenient to borrow funds within the type of public deposits than borrowing the funds from banks and money establishments.
  2. Borrowing funds from banks and money establishments may be a tedious job as compared to borrowing funds from public deposits.
  3. The speed of interest paid on public deposits is a smaller amount as compared with different borrowed funds.
  4. They’re the unsecured type of borrowing.
  5. Funds raised from public deposits will be used for any purpose.
  6. In the case of the credit squeeze, public deposits play an important role.


To conclude, Deposits are accepted for meeting the short, and medium-term capital wants of the corporate starting from one to 3 years, and renewal of deposit is allowed. The explanations for the recognition of deposits were because of the lack of banking facilities within the country.

People most well-liked to deposit with the purported mill-owners due to lack of religion within the banks and low rate of interest offered by them. The speed of interest on public deposits varies from twelve to fourteen percent relying upon the amount of deposit and standing of the corporate.

Anybody interested might fill the prescribed kind and deposit the money with the corporate. The corporate problems a deposit receipt that is an acknowledgment of debt taken by the company. Corporations tempting public deposits are needed to advertise along with their financial position. Such corporations should frequently file returns giving elaborate info concerning public deposits.


The discussion revealed:

Shares are physical/electronic documents proving that you own a neighborhood of the corporate. You get your “share” in the possession and vote in a very company. You’ve got primarily bought into the corporate & it’s pertinent to say that it isn’t a loan.

Public Deposits are well, merely Public Deposits. A form of Loan, if you may. They are to be paid at an as time and reciprocally, the company pays the general public, the interest in providing funds. They do not get possession of voting power within the company. (“Public” during this case, is typically AN outsider & not the investor.)


There are a few opinions and recommendations by family and friends whom I discussed my project findings with; they are given below:

  • More awareness of public deposits
  • Benefits, as well as disadvantages, should be told to the public
  • The rate of interest should be increased
  • Public deposits should be more in favor of the people and not the other way around.


My profound gratitude to all the faculty members of the Department, for their timely assistance and encouragement throughout my research work.

I duly acknowledge the encouragement and support from the research scholars in the department, and all my colleagues and friends.

It gives me immense pleasure to take the opportunity to all the people who are directly or indirectly involved in the completion of my project based on the Informative Report On Public Deposit Invited By Company.

With deep reverence, I offer my deepest gratitude _____, without whom this project could not have been fulfilled.

Lastly, I thank Almighty, my parents, family members, friends, and teachers for their constant encouragement and support, without which this project would not be possible.

Name of School/College



  • http://www.yourarticlelibrary.com/share-market/public-deposits-definition-merits-and-demerits-of-public-deposits/27971
  • http://www.accountingnotes.net/financial-management/public-deposits/public-deposits-meaning-advantages-and-regulation/6507
  • https://www.careerride.com/fa-public-deposits.aspx
  • https://www.slideshare.net/cssunnychadha/invitation-and-acceptance-of-public-deposits

About Purti_V

Check Also

, Bird and Animals Damage the Crops, Significantly Higher in Fields that are Closer to Forest Areas, HSC Projects, HSC Projects

Bird and Animals Damage the Crops, Significantly Higher in Fields that are Closer to Forest Areas


One comment

  1. Nice one in detail thank you so much

    I 😍 this web

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!