RM25 - Nidhis | Finin2min

Chapter orientation

What Chapter XXVI regulates

A Nidhi is a public company built around mutual benefit: it cultivates thrift and savings among members, accepts deposits from members, and lends only to members. It is not a bank, not an unrestricted finance company and not a vehicle for taking money from the public at large.

Statutory gateway

Section 406 makes Central Government declaration central to Nidhi status and permits tailored Companies Act exemptions or modifications.

Operating code

The Nidhi Rules, 2014 prescribe capital, membership, deposit, branch, lending, governance, reporting and prudential limits.

Member-only perimeter

Deposits and loans must remain within the member relationship; public solicitation and non-member financing undermine the model.

Consumer-risk lens

Deposit money is not represented as insured or guaranteed by the Central Government, RBI or another authority.

Section 406 map

Five statutory functions

Provision	Legal function	Practical question
406(1)	Definition linked to Central Government Gazette declaration	Has the company actually been declared, or is it only incorporated with Nidhi objects?
406(2)	Power to exempt or modify Companies Act provisions	Which Section 462/406 notification applies to the company?
406(3)	Draft notification laid before Parliament for 30 days	Was the exemption/modification made through the statutory process?
406(4)	Certain adjournment periods excluded from 30-day count	How is the parliamentary period computed?
406(5)	Final notification laid before both Houses	Is the operative notification available in the legal file?

Core distinction: incorporation with a Nidhi name or object is not the same as Government declaration under Section 406. The post-2022 regime expressly conditions commencement of Nidhi business on approval.

Full Bare Act

Section 406 - operative text

406. Provision relating to Nidhis and its application, etc. (1) In this section, "Nidhi" or "Mutual Benefit Society" means a company which the Central Government may, by notification in the Official Gazette, declare to be a Nidhi or Mutual Benefit Society, as the case may be. (2) The Central Government may, by notification in the Official Gazette, direct that any of the provisions of this Act specified in the notification - (a) shall not apply to any Nidhi or Mutual Benefit Society; or (b) shall apply to any Nidhi or Mutual Benefit Society with such exceptions, modifications and adaptations as may be specified in the notification. (3) A copy of every notification proposed to be issued under sub-section (2), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days, and if, both Houses agree in disapproving the issue of notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses. (4) In reckoning any such period of thirty days as is referred to in sub-section (3), no account shall be taken of any period during which the House referred to in sub-section (3) is prorogued or adjourned for more than four consecutive days. (5) The copies of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Parliament.

Legislative note: the current Section 406 was substituted with effect from 15 August 2019. Legacy study material may reproduce the former wording and should not be relied upon without checking the present text.

Rules architecture

Nidhi Rules 2014 - operational map

Rule	Subject	Control owner
1-3	Title, application and definitions	Legal / company secretary
3A-3B	Declaration of legacy and post-2022 Nidhis	Board / promoters / legal
4-5	Incorporation, capital and legacy threshold framework	Board / finance
6	General prohibitions	Board / business / compliance
7-9	Shares, membership and net owned funds	Secretarial / finance
10	Branches and closure	Board / regional operations
11-14	Deposit ceiling, application, tenure/rates and liquidity buffer	Treasury / finance / compliance
15-16	Member loans, permitted security and interest	Credit / operations
17-20	Directors, dividend, auditor and prudential norms	Board / audit
21-22	NDH-3 return and auditor certificate	Company secretary / auditor
23-23B	Regulatory information, special officer and transition rules	Board / legal
24	Penalty for contravention	Company and officers in default

How to use this chapter: first identify the company's incorporation cohort and declaration status. Only then apply thresholds, filing forms and transition provisions.

Declaration cohorts

Which rule applies to which company?

Cohort	Primary route	High-risk issue
Declared under the Companies Act, 1956	Rule 23B / NDH-4 status updation	Assuming old declaration removes current filing and prudential obligations
Pre-15 Aug 2019 company functioning as Nidhi	Rules 3A and 23A transition framework	Continuing deposits or loans without declaration compliance
Incorporated 15 Aug 2019 to 18 Apr 2022	Rule 3A and applicable transition provisions	Using outdated one-year timetable without checking later amendments
Incorporated on/after 19 Apr 2022	Rule 3B: NDH-4 within 120 days, 200 members, NOF Rs 20 lakh	Starting Nidhi business before declaration and INC-20A linkage

Do not mix cohorts: Rule 5's one-year threshold framework is not the operating declaration route for a company incorporated on or after 19 April 2022.

Rule 3B

Post-19 April 2022 declaration process

1. Incorporate public company

Objects must be limited to cultivating thrift/savings, receiving member deposits and lending to members for mutual benefit.

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2. Achieve threshold

At least 200 members and net owned funds of at least Rs 20 lakh.

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3. Test fit and proper

All promoters and directors submit declarations and must satisfy integrity and disqualification screens.

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4. File NDH-4

Application within 120 days of incorporation with supporting certificates and prescribed fee.

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5. Government decision

The rule creates a 45-day decision framework and conditions for deemed approval.

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6. Gazette and ROC filing

After declaration, file the approval with ROC through the applicable commencement filing and only then start Nidhi business.

Business commencement risk: accepting deposits or advancing member loans before the statutory declaration is a fundamental perimeter failure, not merely a late-form defect.

Declaration is the perimeter gate: a post-19 April 2022 company must satisfy Rule 3B, file NDH-4 within 120 days, meet 200-member and Rs. 20 lakh NOF conditions, pass fit-and-proper tests and obtain or validly reach the prescribed declaration outcome before accepting deposits or granting loans. Apply the 45-day deemed-approval mechanism only to a complete eligible application.

Fit and proper test

Promoter and director eligibility under Rule 3B

Integrity and reputation

Consider honesty, financial soundness, reputation and absence of adverse conduct.

Criminal/economic offences

Pending authorised complaints, charge-sheets or convictions specified by the rule can disqualify.

Regulatory restraints

Debarment, restraint or prohibition by a financial-sector regulator is relevant.

Insolvency/default status

Undischarged insolvency, wilful default and fugitive economic offender status are disqualifying risk indicators.

Capacity

Unsoundness of mind or other legal incapacity must be screened.

Multiplicity limits

The rule restricts excessive promoter/director involvement across Nidhi companies.

Evidence pack: declarations should be supported by MCA master data, DIN status, litigation/regulatory searches, credit/default checks and board-reviewed exception notes. A signed self-declaration alone is weak governance.

Rules 4, 7 and 9

Capital and membership foundation

Requirement	Current control	Practical check
Company type	Public company	Verify articles, minimum directors and public-company governance
Paid-up equity	At least Rs 10 lakh	Use fully paid equity; preference shares are prohibited
Share denomination	Fully paid equity shares of nominal value at least Rs 10	No service charge on issue
Deposit-holder shareholding	Generally at least 10 shares or Rs 100; savings/recurring depositor at least one Rs 10 share	Retain minimum holding throughout deposit/loan relationship
Members	Must not fall below 200	No body corporate or trust; minor only through member guardian for deposit
Net owned funds	At least Rs 20 lakh	Reconcile paid-up equity + free reserves - losses - intangible assets

NOF = paid-up equity share capital + free reserves - accumulated losses - intangible assets

Rule 8

Member onboarding and continuity controls

Natural-person perimeter

A body corporate or trust cannot be admitted as a member.

Minor account

A minor cannot be a member, but a deposit can be accepted in the minor name through a guardian who is a member.

Transfer restriction

A member with an outstanding deposit or loan cannot transfer more than 50% of shareholding and must retain the minimum required shares.

KYC and beneficial identity

Membership should be real, traceable and supported by KYC; mass nominal memberships created only to reach 200 create regulatory risk.

First-named joint holder

Where a loan is to joint shareholders, the first-named holder is treated as the borrowing member under the rule.

Exit control

Before membership cessation, clear deposit, loan, interest and share-transfer consequences.

Substance over count: 200 paper members do not validate a Nidhi if transactions are effectively with outsiders, agents or related entities.

Rule 6

Activities a Nidhi must not undertake

Prohibited conduct	Why it matters
Chit fund, hire purchase, leasing or insurance business	Outside the narrow mutual-benefit purpose
Acquiring securities issued by a body corporate	Prevents investment-company behaviour
Preference shares, debentures or other debt instruments	Preserves prescribed capital and funding model
Current accounts with members	Not a bank-like transaction-account model
Control/management arrangement in another company	Prevents group-control expansion through member funds
Deposits from or loans to non-members / body corporates	Breaks member-only perimeter
Pledging assets lodged by members as security	Protects member collateral
Partnership in borrowing/lending	Avoids off-book or shared financing structures
Public advertisement for deposits	No general-public solicitation; limited private member circulation only
Brokerage or incentive to mobilise deposits/loans	Reduces aggressive sales and mis-selling
External borrowing to advance loans to members	Nidhi lending is not to be leveraged through banks/FIs or other sources

Rules 11-13

Deposit ceiling, tenure and interest

Deposit product / control	Rule
Aggregate deposits	Generally not more than 20 times net owned funds as per last audited financial statements
Fixed deposit tenure	Minimum 6 months; maximum 60 months
Recurring deposit tenure	Minimum 12 months; maximum 60 months
Savings account interest-bearing balance	Maximum Rs 1 lakh
Savings interest ceiling	Not more than 2 percentage points above nationalised bank savings rate
FD/RD rate ceiling	Not above maximum rate prescribed by RBI for NBFC public deposits
Repayment within first 3 months	Not permitted except death-related exception
Repayment after 3 but before 6 months	No interest
Premature repayment after 6 months	Interest generally reduced by 2 percentage points

Daily monitoring: deposit cap, maturity ladder, early withdrawals and rate changes should be controlled in the core system. Annual audit alone is too late.

Rule 12

Deposit application and disclosure standard

Every deposit application should help a member understand the company, the product, risks, repayment terms and the absence of Government or RBI guarantee.

Identity and status

Name, incorporation details, declaration/notification date, registered office and branches.

Governance

Directors, DINs and relevant compliance information.

Financial history

Three-year profits/dividends and two-year summary of NOF, deposits, loans, tax and dividend.

Product economics

Amount, term, interest, pre-closure terms and maturity.

Risk statements

Deposits are unsecured/subject to member risk as prescribed; no Central Government/RBI guarantee or insurance representation.

Remedies and verification

NCLT/consumer remedy statements, Board declaration and applicant KYC/identity/address evidence.

Mis-selling red flag: words such as "bank deposit", "government approved return", "RBI guaranteed" or "risk-free" are incompatible with the prescribed disclosures.

Rule 14

Unencumbered term-deposit buffer

Core rule: keep unencumbered term deposits of at least 10% of deposits outstanding at the close of business on the last working day of the second preceding month.

Element	Control
Permitted institution	Scheduled commercial bank other than co-operative bank or regional rural bank, or post office
Encumbrance	No charge, lien or pledge that defeats liquidity availability
Measurement date	Last working day of second preceding month
Temporary withdrawal	Only for depositor repayment and with prior Regional Director approval through prescribed application
Monitoring	Monthly certificate and bank confirmation; maturity date should cover liquidity horizon

Minimum liquidity buffer = 10% x relevant outstanding deposits

Example: If relevant outstanding deposits are Rs 8 crore, the minimum unencumbered term-deposit buffer is Rs 80 lakh.

Rule 15

Member-loan limits and security

Total deposits (last audited FS)	Maximum loan to a member
Less than Rs 2 crore	Rs 2 lakh
More than Rs 2 crore but less than Rs 20 crore	Rs 7.5 lakh
More than Rs 20 crore but less than Rs 50 crore	Rs 12 lakh
More than Rs 50 crore	Rs 15 lakh

Loss-year restriction: where the Nidhi has not made profits continuously in the three preceding financial years, fresh loan limits are restricted to 50% of the relevant slab. A defaulting member cannot receive another loan until the default is cleared.

Permitted security	Key limit
Gold, silver and jewellery	Loan generally not exceeding one year; valuation and custody controls essential
Immovable property	Individual loan generally not above 50% of property value; term not above seven years, subject to portfolio limits
Fixed deposit receipts, NSCs, Government securities, insurance policies	Loan maturity must not exceed maturity of underlying instrument/policy

Rule 16

Loan pricing and member fairness

Spread cap

Loan rate cannot exceed the highest deposit rate by more than 7.5 percentage points.

Reducing balance

Interest must be calculated on reducing balance, preventing flat-rate concealment.

Same class, same rate

Members within the same borrower class should receive the same rate.

Display obligation

Rates should be displayed prominently at registered office and branches.

No hidden charges

Fees should not be used to defeat the rate cap or create unfair effective yield.

Board governance

Approve product classes, rate grid, exceptions and change dates through documented policy.

Example: If the highest deposit rate is 8%, the loan rate ceiling under the rule is 15.5%, subject to the reducing-balance and class-equality controls.

Rule 10

Opening and closing branches

Branch expansion is conditional, not automatic. Profit history, geography, annual filing status and Regional Director approval determine the route.

Action	Requirement
Open any branch	Profit after tax continuously in each of the preceding three financial years
Up to three branches	Within the district of registered office
More than three in same district / branch outside district	Prior Regional Director permission through prescribed process
Outside the State	Not permitted
While financial statements or annual return are overdue	Branch opening blocked
Close branch	Board-approved plan, prior RD application, member/depositor protection, newspaper notice and ROC intimation

Branch data pack: member register, deposit ledger, loan/security documents, cash/bank controls, KYC, rate board and complaints should be branch-identifiable but centrally reconcilable.

Rules 17-19

Directors, dividend and auditor rotation

Area	Rule
Director membership	A director must be a member of the Nidhi
Director tenure	Maximum ten consecutive years; two-year cooling period before reappointment
General director eligibility	Sections 152(4) and 164 conditions also apply
Dividend	Maximum 25%, subject to Companies Act conditions and distributable profits
Individual auditor	One term of five consecutive years
Audit firm	Two terms of five consecutive years
Auditor cooling-off	Two years after maximum tenure

Governance trap: high dividend, weak provisioning and aggressive deposit mobilisation can create the appearance of profitability while eroding depositor protection.

Rule 20

Income recognition, classification and provisioning

Asset class / issue	Core treatment
NPA definition	Interest or principal remains unrealised for 12 months
NPA income	Recognise on cash basis; reverse unrealised accrued interest
Standard mortgage loan	No prescribed provision
Sub-standard mortgage loan	10% provision
Doubtful mortgage loan	25% provision
Loss asset	100% provision
Gold/silver/jewellery loan	Recovery or renewal within three months after due date; otherwise stop income and provide
Jewellery LTV	Generally not above 80%

Expected discipline: classify loan-by-loan, preserve valuation and legal-enforcement evidence, age overdues consistently and report reversals separately from collections.

Rules 21-22

NDH filings and annual auditor certificate

Form / report	Purpose	Timeline / trigger
NDH-1	Legacy statutory compliance return under Rule 5	Within 90 days from close of relevant first financial year, where applicable
NDH-2	Application to Regional Director for extension/branch matters/other prescribed permissions	Event-based, within prescribed period
NDH-3	Half-yearly return	Within 30 days from conclusion of each half-year; certified by practising CA/CS/CMA
NDH-4	Application for declaration/update of status	Cohort-specific; post-2022 company within 120 days of incorporation
Auditor certificate	Annual certificate stating compliance with all Nidhi Rules and specifying non-compliance	Annexed to audit report

Certification is not clerical: the professional should independently test membership, NOF, deposit cap, liquidity, branches, loans, rates, NPAs and prohibited transactions.

Audit overlay

CARO and financial-statement controls

NOF-to-deposit ratio

CARO asks whether the Nidhi maintained the 1:20 ratio.

Unencumbered deposits

CARO asks whether at least 10% unencumbered term deposits were maintained.

Deposit repayment defaults

CARO requires reporting of interest/principal defaults, amount, period and affected persons.

Rule 22 certificate

Broader rule-by-rule compliance certificate accompanies the auditor report.

Schedule III disclosures

Deposit, related party, liquidity, defaults and financial-instrument disclosures should reconcile.

Going concern

Maturity concentration, negative NOF, defaults or regulatory restriction may affect going-concern assessment.

Audit evidence: obtain daily/monthly system extracts and bank confirmations, not only management-prepared year-end summaries.

Section 406/462 overlay

Selected Companies Act modifications for Nidhis

Nidhis remain companies under the Act, but the Central Government has modified or exempted selected provisions through notification. The legal team should preserve the complete current notification and not rely on a generic exemption list.

Provision	Selected effect of 2015 notification
Section 47(1)(b)	Poll voting rights are capped as prescribed for members
Section 62	Specified rights-issue requirements do not apply
Section 67(1)	Share purchase from member ceasing to be depositor/borrower receives special treatment
Section 123(5)	Unclaimed cash dividend may be credited to member account under modified rule
Section 127	Modified treatment for small dividend amounts with notice safeguards
Section 136	Modified financial-statement circulation for certain small holders
Section 160	Director-candidature deposit reduced to Rs 10,000

Exemption discipline: an exemption is not a waiver of the remaining section, conditions in the notification, Nidhi Rules, accounting standards or fraud/false-statement provisions.

Regulatory perimeter

BUDS Act, RBI and public representations

Regulated-deposit status

Deposits accepted by a company declared as a Nidhi under Section 406 are recognised within the regulated-deposit framework under the Banning of Unregulated Deposit Schemes Act.

Declaration matters

A company merely using Nidhi objects or name should not assume the same regulatory status without valid declaration.

Not a bank

A Nidhi must not market itself as a bank or imply deposit insurance.

RBI interface

Rate ceilings and financial-sector principles may apply through the Nidhi Rules, but core administration is under MCA/Companies Act framework.

Member only

The member relationship is the legal boundary for deposits and loans.

Mis-selling risk

Agents, public advertisements, guaranteed returns and false Government association can trigger multiple laws beyond Rule 24.

Rule 24 and wider liability

What happens when the model is breached

Failure	Potential consequence
Contravention of Nidhi Rules	Company and officer: fine up to Rs 5,000 plus up to Rs 500 per day for continuing contravention
False statement in an MCA form	Section 448 and, where facts justify, Section 447 exposure
False evidence/certificate	Section 449 and professional disciplinary exposure
Unauthorised deposits / non-declaration	Deposit restriction, Chapter V consequences, filing blocks and regulatory action
SH-7/PAS-3 block	Specified non-compliant companies cannot alter share capital or file allotment return
Depositor default	Civil recovery, NCLT/consumer remedies, prosecution/penalty and going-concern consequences

Penalty stacking: Rule 24 is not a safe harbour. The same facts can involve the Companies Act, BUDS Act, consumer law, criminal law, professional standards and contractual claims.

Professional control framework

Monthly Nidhi compliance dashboard

Control block	Monthly KPI / test	Escalation trigger
Declaration	Gazette/NDH-4/INC-20A evidence	Any business before approval
Membership	Active members and KYC exceptions	Below 200 or non-eligible member
NOF	Calculated NOF and reconciliation	Below Rs 20 lakh
Deposit cap	Deposits / NOF ratio	Above 20x or approaching board limit
Liquidity	Unencumbered term-deposit percentage	Below 10% or maturity mismatch
Rates	Deposit/loan product grid	Rate exceeds cap or inconsistent class treatment
Loans	Per-member cap and permitted security	Over-limit, unsecured or defaulting member
NPA	Ageing, reversal and provisioning	Accrued NPA interest or under-provision
Branches	Profit test, approvals and filing status	Unauthorised location / overdue annual filing
Returns	NDH-3, annual audit certificate	Late, unreconciled or unsupported filing

Practical case bank

Twelve decisions for Boards, auditors and professionals

1. Incorporated but not declared

Facts: A new public company has 220 members and wants to accept deposits 60 days after incorporation.

Answer: Meeting thresholds is not enough. It must complete Rule 3B declaration and related commencement filing before starting Nidhi business.

2. Member count falls to 190

Answer: Immediate remediation and regulatory assessment are required. The company cannot treat 200 as a one-time incorporation milestone.

3. Deposit ratio at 19.8x NOF

Answer: Technically below 20x, but the Board should create a lower internal buffer because losses, withdrawals from reserves or audit adjustments can cause breach.

4. Corporate member

Answer: A body corporate or trust cannot be a member. Deposits and loans through that entity are outside Rule 8.

5. Bank loan used to fund member loans

Answer: Rule 6 prohibits external borrowing from bank/FI/other source for advancing to members.

6. Fourth branch in same district

Answer: Prior Regional Director permission is required; continuous three-year PAT and current annual filings must also be demonstrated.

7. Branch outside State

Answer: Not permitted under Rule 10; RD approval does not create a route outside the State.

8. Loan to defaulting member

Answer: No further loan may be granted until the default is cleared, even if fresh collateral is offered.

9. Flat-rate member loan

Answer: Rule 16 requires reducing-balance calculation. A flat-rate quote can breach the rule and mislead members.

10. NPA interest accrued

Answer: Reverse unrealised income and recognise on cash basis; recompute provisioning and profit/dividend capacity.

11. Auditor relies on NDH-3 only

Answer: Insufficient. Rule 22 certification requires rule-by-rule testing from source records.

12. Public social-media campaign

Answer: General-public deposit promotion is prohibited. Limited private circulation to members must carry the prescribed character and should not become disguised public advertising.

Board and Audit Committee agenda

Quarterly governance template

Financial resilience

NOF and 20x ratio
10% liquidity buffer
Maturity ladder
NPA and provisioning movement
Deposit repayment defaults

Member fairness

Rate grid and class consistency
Complaints and premature withdrawals
Loan rejections and defaults
Collateral custody
Mis-selling incidents

Regulatory

Declaration/Gazette status
NDH forms and certifications
Branch approvals
Annual filings current
Notices and inspections

People and controls

Director fit and proper
Auditor tenure
Maker-checker overrides
Agent/incentive scan
Cyber and data integrity

Pre-filing checklist

NDH-3 and annual certification

Population

Member register reconciled
Ineligible members removed/analysed
Deposits linked to member IDs
Loans linked to member IDs
Branch-wise ledgers complete

Finance

NOF recomputed
Deposit cap tested
10% buffer confirmed by bank
Rates independently recalculated
NPA/provisioning tested

Legal

Declaration evidence valid
Branch permissions available
No public advertisement
No non-member transaction
No external borrowing for relending

Filing archive

Board approval/signatory authority
Professional certificate
Source workbook frozen
Final PDF and SRN
Exception remediation tracker

Finin2min Q&A

Nineteen rapid answers

Q1. Is every company named Nidhi Limited legally a Nidhi?

No. Current law centres on Central Government declaration; since July 2024 an undeclared company cannot use the words Nidhi Limited.

Q2. Can a Nidhi accept deposits from the public?

No. Deposits are from members only.

Q3. Can an LLP become a member?

No. A body corporate cannot be admitted as a member.

Q4. What is the minimum member count?

200.

Q5. What is minimum paid-up equity?

Rs 10 lakh.

Q6. What is minimum net owned funds?

Rs 20 lakh.

Q7. What is the deposit cap?

Generally 20 times net owned funds.

Q8. What liquidity buffer is required?

At least 10% of relevant outstanding deposits in unencumbered permitted term deposits.

Q9. Can a Nidhi open a branch in another State?

No.

Q10. Can it borrow from a bank to relend?

No.

Q11. Can it lend without security?

No; loans must be against the permitted security classes and within limits.

Q12. Can it give another loan to a defaulting member?

No, until the default is cleared.

Q13. What is the loan/deposit rate spread cap?

7.5 percentage points above the highest deposit rate.

Q14. Can dividend exceed 25%?

No under Rule 18, and Companies Act profit/distribution conditions also apply.

Q15. Is NDH-3 annual?

No. It is half-yearly and due within 30 days from each half-year end.

Q16. Does Rule 24 replace fraud provisions?

No. False statements, false evidence and fraud can create separate exposure.

Q17. Are Nidhi deposits bank insured?

The prescribed disclosures do not permit a Government/RBI guarantee or insurance representation.

Q18. Can a minor be a member?

No, though a deposit may be accepted in the minor name through a guardian who is a member.

Q19. Can Nidhi business start immediately after incorporation?

For the post-2022 cohort, no; declaration and the commencement linkage must first be completed.

Final revision framework

The NIDHI mnemonic

N - Notification

Declaration in the Official Gazette is the legal gateway.

I - Inside the membership

Deposits and loans remain member-only.

D - Depositor discipline

20x cap, 10% buffer, tenure/rate and disclosure controls.

H - Healthy lending

Slab limits, permitted security, reducing-balance pricing and NPA provisioning.

I - Inspection-ready

NDH filings, auditor certificate, branch approvals and source evidence.

Red flags

Public ads, non-members, external borrowing, out-of-State branch, accrued NPA interest, false guarantee.

Amendment timeline

Major operative milestones

31 March 2014
Nidhi Rules, 2014 notified.

15 August 2019
Substituted Section 406 and declaration architecture through Rule 3A/NDH-4.

3 and 14 February 2020
Transition-period amendments.

19 April 2022
Major Rule 3B regime for new Nidhis: 120-day application, 200 members, Rs 20 lakh NOF and fit-and-proper controls.

23 January 2023
MCA V3 substitution of NDH forms.

16 July 2024
Undeclared company barred from using the words Nidhi Limited.

Currency control: the July 2024 amendment is the latest Nidhi-specific amendment located in the official materials Reviewed through 28 June 2026. Always verify Gazette and MCA form versions immediately before filing.

Source register

Primary and operational references

Companies Act, 2013 - Section 406, India Code
https://www.indiacode.nic.in/show-data?actid=AC_CEN_22_29_00008_201318_1517807327856&orderno=458&sectionId=49301&sectionno=406

Nidhi Rules, 2014 - consolidated operational text
India Code / Official Gazette - Nidhi Rules, 2014 and amendments

Nidhi (Amendment) Rules, 2019 - G.S.R. 467(E)
https://www.indiacode.nic.in/ViewFileUploaded?file=nidhi_%28amendment%29_rules%2C_2019_dt_01.07.2019.pdf&path=AC_CEN_22_29_00008_201318_1517807327856%2Frulesindividualfile%2F

Nidhi (Second Amendment) Rules, 2020 - G.S.R. 114(E)
https://www.indiacode.nic.in/ViewFileUploaded?file=nidhi_%28second%29_amendment_rules_2020.pdf&path=AC_CEN_22_29_00008_201318_1517807327856%2Frulesindividualfile%2F

Companies (Incorporation) Amendment Rules, 2022 - commencement linkage
https://www.indiacode.nic.in/ViewFileUploaded?file=companies_%28incorporation%29_amendment_rules_2022.pdf&path=AC_CEN_22_29_00008_201318_1517807327856%2Frulesindividualfile%2F

Nidhi exemption notification - G.S.R. 465(E), 5 June 2015
https://www.indiacode.nic.in/ViewFileUploaded?file=Exemptions+to+Nidhis+under+section+462+of+CA+2013.pdf&path=AC_CEN_22_29_00008_201318_1517807327856%2Fnotificationindividualfile%2F

Banning of Unregulated Deposit Schemes Act - First Schedule
https://upload.indiacode.nic.in/schedulefile?aid=AC_CEN_3_20_00070_A2019-21_1566198986977&rid=769

Update discipline: This package is Reviewed through 28 June 2026. Before acting, verify the current Gazette, MCA instruction kit, NDH form version, Regional Director process and any company-specific declaration or order.