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What is Nidhi Company?

'Nidhi' means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and saving 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

Incorporation & Incidental Matters

A Nidhi shall be a public company and shall have a minimum paid up equity share capital of 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 Memorandum of Association 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.

What is Nidhi Company

General Restrictions or Prohibitions

No Nidhi shall-

  • carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
  • issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
  • open any current account with its members;
  • 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;
  • accept deposits from or lend to any person, other than its members;
  • pledge any of the assets lodged by its members as security
  • take deposits from or lend money to any body corporate
  • issue or cause to be issued any advertisement in any form for soliciting deposit:


A Nidhi may open branches, only if it has earned net profits after tax continuously during the preceding three financial years.

A Nidhi may open up to three branches within the district.

If a Nidhi proposes to open more than three 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 thirty days of such opening

A Nidhi shall not close any branch unless it-

(a) publishes an advertisement in a newspaper in vernacular language in the place where it carries on business at least thirty days prior to such closure, informing the public about such closure;

(b) 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 thirty days from the date on which advertisement was published under clause (a) ; and

(c) gives an intimation to the Registrar within thirty days of such closure.



  • No Nidhi shall appoint or re-appoint an individual as auditor for more than one term of five consecutive years.
  • No Nidhi shall appoint or re-appoint an audit firm as auditor for more than two terms of five consecutive years.
  • Provided that an auditor (whether an individual or an audit firm) shall be eligible for subsequent appointment after the expiration of two years from the completion of his or its term.
  • in case of an auditor (whether an individual or audit firm), the period for which he or it has been holding office as auditor prior to the commencement of these rules shall be taken into account in calculating the period of five consecutive years or ten consecutive years, as the case may be;

Rules relating to Directors

(1) The Director shall be a member of Nidhi.

(2) The Director of a Nidhi shall hold office for a term up to ten consecutive years on the Board of Nidhi.

(3) The Director shall be eligible for re-appointment only after the expiration of two 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 section152 of the Act and shall not have been disqualified from appointment as provided in section 164 of the Act.

Forms to be filled

• Form NDH-1-Return of Statutory Compliance.

This form contains all the details regarding members, deposits, loans, reserves etc. for the full financial year. It is to be Within 90 days from the close of financial year along with fees. It must be duly certified by PCA/PCS/CMA.


• Form NDH-2-Application for Extension of Time.

This form is filled in case the company fails to add at least 200 members within one year of incorporation. Failure to maintain the Net owned Fund to deposit ratio of 1:20

NDH-2 must be filed with the Regional Director within 30 days from the closure of financial year along with the prescribed fees.

• Form NDH 3-Half-yearly return to be filed with the ROC (Registrar of Companies).

Within 30 days from the conclusion of half a year. It must be duly certified by a practicing professional.

• Form AOC-4-For filing financial documents.

Within 30 days of the annual general meeting.

• Form MGT-7-Annual Return-Within 60 days of the Annual General Meeting.

Auditor's Certificate

The Auditor of the company shall furnish a certificate every year to the effect that the company has complied with all the provisions contained in the rules and such certificate 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.

Some Other Points

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 two hundred members at any time.

A minor shall not be admitted as a member of Nidhi:

A Nidhi shall give loans to its members only against the following securities, namely:-

  • Gold, silver and jewellery: immovable property:
  • A Nidhi shall not accept deposits exceeding twenty times of its Net Owned Funds (NOF) as per its last audited financial statements.


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