Before the Nidhi (Amendment) Rules, 2019 that came into force on 15th of August 2019, the word “Nidhi” was not defined in the Nidhi Rules 2014. It is similar to the definition in the Companies Act 2013 but this amendment was necessary for clarity and comprehension. The Amendment brought the following changes in the 2014 Rules:

  • Inserting clause (da) after clause (d)

‘(da) “Nidhi” means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with the rules made by the Central Government for regulation of such class of companies.’

Further, after rule 3 (which deals with definition), another rule 3A was added which reads as follows:

  • ‘3A. Declaration of Nidhis– 

The Central Government, on receipt of application (Form NDH-4)of a public company for declaring it as Nidhi and on being satisfied that the company meets the requirements under these rules, shall notify the company as a Nidhi in the Official Gazette;

Provided that a Nidhi incorporated under the Act on or after the commencement of the Nidhi (Amendment) Rules, 2019 shall file form NDH-4 within sixty (60) days from the date of expiry of-

  1. 1 year from the date of its incorporation; or
  2. The period up to which extension of time has been granted by the Regional Director.

Provided further that in case a company does not comply with the requirements of this rule, it shall not be allowed to file form SH-7 (Notice to Registrar for any alteration of share capital) and form PAS-3 (Return of Allotment)’


  1. A Nidhi shall be a public company and shall have a minimum paid up equity share capital of 5, 00,000 (five lakh rupees).
  2. On and after the commencement of the Act, no Nidhi shall issue preference shares.
  3. If preference shares had been issued by a Nidhi before the commencement of this Act, such preference shares shall be redeemed in accordance with the terms of issue of such shares.
  4. Except as provided under the proviso to sub-rule (e) to rule 6, no Nidhi shall have any object in its MOA other than the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.
  5. Every “Nidhi” shall have the last words ‘Nidhi Limited’ as part of its name.


  1. Every Nidhi shall, within a  period of 1 year from the date of its incorporation, ensure that it has-
  2. Not less than 200 members;
  3. Net Owned Funds of 10, 00, 000 or more;
  4. Unencumbered term deposits of not less than 10% of the outstanding deposits as specified in rule 14; and
  5. Ratio of Net Owned Funds to deposits of not more than 1:20.
  6. Within 90 days from the close of the first financial year after its incorporation and where applicable, the second financial year, Nidhi shall file a return of statutory compliances along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 with the Registrar duly signed by a company secretary in practice or a chartered accountant in practice or a cost accountant in practice.
  7. If a Nidhi is not complying with clauses (a) or (d) of sub-rule (1), it shall, within 30 days from the close of the financial year, apply to the Regional Director for extension of time and the Regional Director may consider the application and pass orders within 30 days of receipt of the application.


No Nidhis shall-

  1. Carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
  2. Issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
  3. Open any current account with its members;
  4. Acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or 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 such Nidhi;
  5. Carry on any business other than the business of borrowing or lending in its own name;
  6. Accept deposits from or lend to any person, other than its members;
  7. Pledge any of the assets lodged by its members as security;
  8. Take deposits from or lend money to any body corporate;
  9. Enter into any partnership arrangement in its borrowing or lending activities;
  10. Issue or cause to be issued any advertisement in any form for soliciting deposit;
  11. Pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans.


  1. A Nidhi may open branches, only if it has earned profits after tax continuously during the preceding 3 financial years.
  2. A Nidhi may open up to 3 branches within the district.
  3. If a Nidhi proposes to open more than 3 branches or any branch outside the district, it shall obtain the prior permission of the Regional Director and intimation is to be given to the ROC about opening every branch within 30 days of such opening.
  4. No Nidhi shall open branches or collection centres or offices or a deposit centre outside the State where it is registered office is situated.
  5. No Nidhi shall open branches or collection centres or offices or deposit centres unless financial statement and annual return (up to date) are filed with the Registrar.
  6. A Nidhi shall not close any branch unless it-
  7. 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;
  8. 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 such advertisement was published;
  9. Gives intimation to the Registrar within 30 days of such closure.


  1. The Director shall be a member of Nidhi.
  2. The Director of a Nidhi shall hold office for a term up to 10 consecutive years on the Board of Nidhi.
  3. The Director shall be eligible for re-appointment only after the expiration of 2 years of ceasing to be a Director.
  4. 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.
  5. The person to be appointed as a Director shall comply with the requirements of sub-section (4) of Section 152 of the Companies Act and shall not have been disqualified from appointment as provided under Section 164 of the Act.


  1. For the purposes of enforcing compliances with these rules, the Registrar of Companies may call for such information or returns from Nidhi as he deems necessary and may engage the services of chartered accountants, company secretaries in practice, cost accountants, or any firm thereof from time to time for assisting him in the discharge of his duties.
  2. In respect of any Nidhi which has violated these rules or has failed to function in terms of the Memorandum and Articles of Association, the concerned Regional Director may appoint as Special Officer to take over the management of Nidhi and such Special Officer shall function as per the guidelines given by such Regional Director:

Provided that an opportunity of being heard shall be given to the concerned Nidhi by the regional Director before appointing any Special Officer.


If a company falling under rule 2 contravenes any of the provisions, the company and every officer of the company who is in default, shall be punishable with fine which may extend up to five thousand rupees (5,000) and where the contravention is a continuing one, with a further fine which may extend up to five hundred rupees (500) for every day after which the contravention continues. 


[Pursuant to sub-rule (2) of rule 5 of Nidhi Rules ,2014]

  1. Corporate Identification Number (CIN) of Nidhi
  2. (a) Name of Nidhi,

(b) Address of its registered office, 

(c) E-mail id (if any)

  1. (a) Number of subscribers to the Memorandum,

(b) Number of members admitted since date of incorporation up to the end of the first financial year,

(c) Number of persons who have ceased to be members up to the end of first financial year

  1. Whether the number of members as at the end of the first financial year is at 200 or more (Yes/No)
  2. If the answer to point 4 is No, whether application for extension of time has been made by Registrar (Yes/ No), if Yes, SRN of the application.
  3. Net owned funds
  4. Unencumbered Term Deposits
  5. Ratio of Net Owned Funds to Deposits

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