Explain the following term / concept : Secured Deposit

Answer: A secured deposit is a deposit accepted by a company which is secured by creating a charge on the assets of the company.

• Under the Companies (Acceptance of Deposits) Rules, 2014, a company may accept secured deposits by creating a charge (other than on intangible assets) on its assets.
• The total value of the security must not be less than the amount of deposits accepted and the interest payable.
• A trust deed must be executed and a deposit trustee appointed before issuing the circular or advertisement.
• Depositors are thus assured of repayment, unlike unsecured deposits which carry no charge on assets.