Public deposits can be raised by companies to meet their short-term and medium-term financial needs. It is a simple method of raising finance for which the company has only to advertise in the newspapers giving particulars about its financial position as prescribed by the Companies Act. The deposits are not required to be covered by mortgaging assets or by other securities. Moreover deposits can be invited by offering a higher rate of interest than the interest on bank deposits.

Legal requirements:

1. The aggregate of all outstanding deposits cannot exceed 25&0f the paid up capital and free reserves of the company
2. Interest to be allowed on deposits must also be in accordance with the rate fixed by the Government
3. At the beginning of each year, the company must deposit in a bank at least 10% of the deposits maturing during that year, or invest an equivalent amount in Government securities for repayment of deposits
4. the company has to file a return or statement every year with the Registrar of Companies giving all information relating to the deposits