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Nidhi Company Rules under Companies Act, 2013

A Nidhi Company is a company registered under Section 406 of Companies Act, 2013. It is a non-banking finance company doing the business of lending and borrowing with its members or shareholders.

It is registered as a public company and should have “Nidhi Limited” as the last words of its name. Nidhi Company can be incorporated with a minimum seven members and out of these 7 members, 3 members must be the director of the company. However, Nidhi Company has various restriction and prohibitions which it must follow.

General Restrictions on a Nidhi Company:

According to this Rule no Nidhi shall-

  • Carry on the business of chit fund or leasing finance or hire purchase finance or insurance or acquisition of securities issued by body corporates
  • Issue preference shares / debentures / any other debt instruments
  • Open any current account with its members
  • Accept deposits or lend to any person other than members
  • Advertise for itself asking for a deposit
  • Pledge any of the assets lodged by its members as security
  • Enter into any arrangement for the change of its  management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over Nidhi
  • Pay any brokerage or incentive for mobilizing deposits from members or for deployment of funds or the granting loans
  • Carry on any business other than the business of borrowing or lending in its own name; provided that Nidhi is which have adhered to all the provisions of these rules may provide:
    • locker facilities on rent to its members subject to the rental income from such facilities
    • not exceeding 20% of the gross income of the Nidhi
    • at any point of time during a financial year.

Share Capital and Allotment:

  • Every Nidhi shall issue fully paid up equity shares of the nominal value of not less than Rs. 10/-each ; Provided that this requirement shall not apply to a company referred to in rule 2 (a) and (b)
  • No service charge shall be levied for issue of shares
  • Every Nidhi shall allot to each deposit holder at least a minimum of 10 equity shares or shares equivalent to Rs. 100/- ; Provided that a savings account holder and a recurring deposit account holder shall hold Minimum one equity share of Rs. 10/-


  • A Nidhi shall not admit a body corporate or trust as a member.
  • Except as otherwise permitted under these rules, every Nidhi shall ensure that its membership is not reduced to less than 200 members at any time.
  • A minor shall not be admitted as a member of Nidhi; Provided that deposits may be accepted in the name of a minor, if they are made by the natural or legal guardian who is a member of Nidhi.

Net Owned Funds:

Every Nidhi shall maintain NOF’s (excluding the proceeds of any preference share capital) of Minimum Rs. 10,00,000/- or such higher amount as the CG may specify from time to time.


  • A Nidhi may open branches, only if it has earned net PAT continuously during the preceding 3 financial years.
  • Subject to the provisions contained in rule 10(1), a Nidhi may open up to 3 branches within the district.
  • If a Nidhi proposes to open more than 3 branches within the district or any branch outside the district, it shall obtain the prior permission of the Regional Director and an intimation is to be given to the Registrar about opening of every branch within 30 days of such opening.
  • No Nidhi shall open branches or collection centres or offices or deposit centres, or by whatever name called, outside the State where its registered office is situated.
  • No Nidhi shall open branches or collection centres or offices or deposit centres, or by whatever name called, unless financial statement and annual return (up to date) are filed with the Registrar.
  • A Nidhi shall not close any branch unless it-
    • publishes an advertisement in a newspaper in vernacular language, in the place where it carries on business at least 30 days prior to such closure, informing the public about such closure;
    • fixes a copy of such advertisement or a notice informing such closure of the branch on the notice board of Nidhi for a period of at least 30 days from the date on which advertisement was published under clause (a) ; and
    • gives an intimation to the Registrar within 30 days of such closure.

Acceptance of Deposits:

  • A Nidhi shall not accept deposits exceeding 20 times of its Net Owned Assets as per last audited financial statements.
  • The fixed deposits shall be accepted for a minimum period of 6 months and a maximum period of 60 months.
  • Recurring deposits shall be accepted for a minimum period of 12 months and a maximum period of 60 months.
  • In case of recurring deposits relating to mortgage loans, the maximum period of recurring deposits shall correspond to the repayment period of such loans granted by Nidhi.
  • The maximum balance in a savings deposit account at any given time qualifying for interest shall not exceed Rs.1,00,000/- and the interest shall not exceed 2% above the rate of interest payable to savings bank account by nationalized banks.
  • Interest for fixed and recurring deposits shall be at a rate not exceeding the maximum rate of interest prescribed by RBI which the NBFC can pay on their public deposits.
  • Every Nidhi shall invest and continue to keep invested, in unencumbered term deposits with a scheduled commercial bank or post office deposits in its own name an amount which shall not be less than 10% of the deposits outstanding at the close of the business on the last working day of the second preceding month.
  • In case of unforeseen commitments, temporary withdrawal may be permitted with the prior approval of the Regional Director for the purpose of repayment to depositors, subject to such conditions and time limit which may be specified by the Regional Director to ensure restoration of the prescribed limit of 10%.


  • A Nidhi shall not declare dividend exceeding 25%or Such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in writing and further subject to the following conditions- An equal amount is transferred to General Reserve;
  • There has been no default in repayment of matured deposits and interest; and It has completed with all the rules as applicable to Nidhis.


  • The director shall be a member of Nidhi.
  • He shall hold office for a term up to 10 consecutive years on the Board.
  • He shall be eligible for re-appointment only after the expiration of 2 years ceasing to be a director.
  • Where the tenure of any director in any case had already been extended by the Central Government it shall terminate on expiry of such extended tenure.
  • The person to be appointed as a Director shall comply with the requirements of Section 152(4) of the Act and shall not have been disqualified as provided in Section 164 of the Act.


  • The tenure of Auditor is five consecutive years.
  • No auditor or audit firm as auditor shall be appointed for more than two terms of five consecutive years. 
  • The auditor shall be eligible for subsequent appointment after the expiration of two years from the completion of his term.
  • The Auditor of the company shall furnish a Certificate every year to the effect that the company has complied with all the provision contained in the rules and such certificates shall be annexed to the audit report and in case of non compliance he shall specifically state the rules which have not been complied with.


  • NDH – 1 – Return of Statutory Compliance: Within 90 days from the closure of the first financial year and where applicable form the second financial year.
  • NDH – 2 – Application for Extension of time: Within 30 days from the closure of the financial year.
  • NDH -3 Half Yearly return: Within 30 days from the conclusion of each half year.
  • NDH -4 : For New Nidhi Company– Within 60 days after the expiry of 1 year from the date of its incorporation. For existing Nidhi Company– Within a period of 1 year from its date of incorporation OR within 6 months from the date of commencement of Nidhi Rules 2019, whichever is later.
  • AOC – 4: Filing of Financial Statements within 30 days from the date of the Company’s Annual General Meeting.
  • MGT -7: Annual return along with a list of company members within 60 days of the Annual General Meeting.

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Note: This Post was last updated on January 18, 2023

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