Business PlanNidhi Company

Unencumbered Term Deposits for Nidhi Company

Here is a guide to deposits and other terms of a Nidhi Company. The primary goal of a Nidhi Company, a specific kind of NBFC, is to facilitate member-to-member borrowing and lending.

It is commonly known as Nidhi Company Compliances, which this Mutual Benefit Company requires yearly. Nidhi Rules 2014 and the Companies Act 2013 outline the requirements that a Nidhi Company must meet. This page provides a high-level summary of Nidhi Companies’ compliance guidelines and Terms for Deposits of Nidhi Company

Pre-Incorporation Requirements of Nidhi Company

To qualify for Nidhi Company Registration, all businesses must adhere to rules and regulations. The following are examples of mandatory laws that must be observed:

  • To form a Nidhi Company, you need seven people; three must be the directors.
  • The company’s name must end with “Nidhi Limited,” and it must be a publicly traded corporation.
  • You can’t join Nidhi if you’re a minor, a corporation, or a trust.
  • The Rs. 5 lakh share capital must be subscribed to and paid in full.
  • If Nidhi Company has not had a positive net income for the past three fiscal years, it will not be able to expand into new locations.
  • Interest on the loan can’t be more than 7.5% more than the highest rate offered on deposits.
  • Preference shares the corporation has already issued before the Act’s effective date will be redeemed.
  • The organisation’s top priority is instilling a saving habit among its members.


Compliances Following Nidhi Company’s Incorporation

Widespread Adherence

If you want your firm to be considered a Nidhi, you must do the following within the first year of being incorporated.

  • Within one year of forming, the membership should grow to 200 people.
  • You need to have a minimum of 20 million rupees in “net owned funds” (as updated by the Nidhi (Amendment) Rules, 2022).
  • In no case may the ratio of net owned funds to deposits be more than 1:20.
  • According to Rule 14 of the Nidhi Rules 2014, at least 10% of all deposits must be in the form of unencumbered term deposits.
  • Books of Accounts, or the statutory registers, must be kept by the Nidhi company.
  • Meetings required by law must be called for the Nidhi Company.

Exemptions and special rights under the 2013 Companies Act:

The Nidhi Company shall be exempt from and entitled to certain privileges under the Companies Act, 2013, and the Nidhi Company shall not be subject to the restrictions of the Companies Act, 2013.

Any Nidhi member can be served with legal papers by mailing them to the organisation’s headquarters, delivering them in person, sending them through overnight courier, or using any other method the government specifies.

Making a private placement by a Nidhi Company to any number of persons should not be construed as creating an offer to the public.

Refund of Deposits Policy

  • The total amount of deposits accepted by a Nidhi may not exceed twenty times its Net Owned Assets as of its most recent audited financial statements.
  • The terms of the fixed deposits may range from six months to sixty months.
  • The minimum term for a recurring deposit is 12 months, and the maximum is 60 months.
  • The maximum duration of recurring deposits related to mortgage loans given by Nidhi shall equal the payback duration of such loans.
  • Interest accrued on savings deposit accounts is capped at 2% over the rate of interest provided to savings bank accounts by nationalised banks. It cannot exceed Rs.1,00,000/- at any one time.
  • The NBFC shall pay interest on all fixed and recurring deposits at a rate not to exceed the maximum speed of interest allowed by RBI for NBFCs paying interest on public deposits.
  • Ten per cent or more of the Nidhi’s total deposits as of the close of business on the last working day of the second preceding month must be placed into and maintained in unencumbered term deposits at a scheduled commercial bank or post office in its name.
  • With the Regional Director’s prior approval, a temporary withdrawal may be made for repayment to depositors in the event of unforeseen commitments, subject to such conditions and time limit, which the Regional Director may specify to ensure restoration of the prescribed limit of 10%.


No one outside of a Nidhi is eligible to receive a loan. These restrictions apply to any loans made to a member:

  • Deposits from members totalling less than Rs.2 crores; Rs.2,000,000 where the total amount of deposits from members is more than Rs.2 crores
  • If the total deposits from its members are higher than Rs.2 crores but less than Rs.20 crores, the minimum required deposit is Rs.750,000/-.
  • 12,00,000/- if the sum of its members’ deposits is beyond Rs.25 crores but less than Rs.50 crores;
  • RM15,000,000, where the aggregate deposits of its members exceed Rs.50,000,000.

Please take note that a Nidhi can only lend money to its members against the following collateral:

  • Individuals’ gold, silver, jewellery, and real estate will be used as collateral for loans made to other members.
  • Loans secured by precious metals like gold, silver, and jewellery are only allowed to have a maximum repayment period of one year.
  • The loan amount for real estate cannot be more than 50% of the value of the collateral, and the loan payback term cannot be longer than seven years.
  • Federally insured or government-guaranteed securities or insurance policies, as well as fixed deposit receipts, may be pledged as collateral for loans.
  • Borrowers should expect to pay interest on their loans using the declining balance approach, and the maximum rate they will pay will be no more than 7.5% above Nidhi’s highest interest rate on deposits.
  • The number of deposits for the reasons above shall be determined using the most recent annual financial statements that have been audited.

Necessary returns to be Filed

  • Nidhi shall file with the Registrar, duly certified by a Company Secretary in practice or a Chartered Accountant in practice or a Cost Accountant in practice, a return of statutory compliances in Form NDH – 1 within 90 days after the end of its first financial year following its incorporation and, where applicable, the second financial year.
  • Suppose these requirements are met by the end of the first fiscal year. In that case, it must submit an application to the Regional Director in Form NDH -2, along with the appropriate fee, requesting an extension of time to do so.
  • Within 30 days of the end of each half year, all Nidhi Companies must submit Form NDH-3 to the ROC. For a half year finishing on March 31, the deadline is April 30, and for a year concluding on September 30, it’s October 30. Loans issued by Nidhi Company, along with the specified security and Deposits accepted by the Nidhi Company from its members, are included in the information provided in Form NDH-3. The Company Secretary or a Certified Public Accountant or Certified Management Accountant in Practice should sign off on Form NDH-3.
  • A Nidhi Company must file an e-form NDH-4 within a year of its formation or six months after implementing the Nidhi (Amendments) Rules, 2019, whichever is later, to comply with Rule 3A of the Nidhi (Amendments) Rules, 2019.


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