Nidhi Rules, 2014
(1) These rules may be called Nidhi Rules, 2014.
(2) They shall come into force on the 1st day of April, 2014.
These rules shall apply to,--
(a) every company which had been declared as a Nidhi or Mutual Benefit Society under sub-section (1) of Section 620-A of the Companies Act, 1956;
(b) every company functioning on the lines of a Nidhi company or Mutual Benefit Society but has either not applied for or has applied for and is awaiting notification to be a Nidhi or Mutual Benefit Society under sub-section (1) of Section 620-A of the Companies Act, 1956; and
(c) every company incorporated as a Nidhi pursuant to the provisions of Section 406 of the Act.
1[(d) every company declared as Nidhi or Mutual Benefit Society under subsection (1) of Section 406 of the Act.]
(1) In these rules, unless the context otherwise requires,--
(a) "Act" means the Companies Act, 2013 (18 of 2013);
1[(aa) "Branch" means a place other than the registered office of Nidhi;]
(b) "Doubtful Asset" means a borrowal account which has remained a Nonperforming asset for more than two years but less than three years;
(c) "Loss Asset" means a borrowal account which has remained a Non-performing asset for more than three years or where in the opinion of the Board, a shortfall in the recovery of the loan account is expected because the documents executed may become invalid if subjected to legal process or for any other reason;
(d) "Net Owned Funds" means the aggregate of paid up equity share capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet:
Provided that the amount representing the proceeds of issue of preference shares shall not be included for calcu
The Central Government, on receipt of application (in Form NDH-4 along with fee thereon) 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 days from the date of expiry of--
(a) one year from the date of its incorporation; or
(b) the period up to which extension of time has been granted by the Regional Director under sub-rule (3) of Rule 5:
Provided further that nothing in the first proviso shall prevent a Nidhi from filing Form NDH-4 before the period referred therein:
Provided also that in case a company does not comply with the requirements of this rules, it shall not be allowed to file Form No. SH-7 (Notice to Registrar of any alteration of share capital) and Fo
(1) On and after commencement of Nidhi (Amendment) Rules, 2022, public company desirous to be declared as a Nidhi shall apply, in Form NDH-4, within a period of one hundred twenty days of its incorporation for declaration as Nidhi, if it fulfils the following conditions, namely--
(I) it has not less than two hundred members; and
(II) it has Net Owned Funds of twenty lakh rupees or more.
(2) The company shall also attach, alongwith Form NDH-4, the declaration with regard to fulfilment of fit and proper person criteria, as per this sub-rule, by all the promoters and directors of the company.
(3) For the purpose of determining as to whether any promoter or director is a "fit and proper person", the following shall be taken into account, namely--
(a) integrity, honesty, ethical behaviour, reputation, fairness and character of the person; and
(b) the person not incurring any of the following disqualifications, namely--
(i) criminal complai
(1) A Nidhi 1[x x x x] shall be a public company and shall have a minimum paid up equity share capital of 2[ten lakh rupees]:
3[Provided that every Nidhi existing as on the date of commencement of the Nidhi Amendment Rules, 2022, shall comply with this requirement within a period of eighteen months from the date of such commencement]
(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 4
(1) Every Nidhi shall, within a period of one year 1[from the date of its incorporation], ensure that it has--
(a) not less than two hundred members;
(b) Net Owned Funds of ten lakh rupees or more;
(c) unencumbered term deposits of not less than ten per cent of the outstanding deposits as specified in Rule 14; and
(d) ratio of Net Owned Funds to deposits of not more than 1:20.
(2) Within ninety 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 in Form NDH-1 along with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 with the Registrar duly certified by a company secretary in practice or a chartered accountant in practice or a cost accountant in practice.
(3) If a Nidhi is not complying with clauses (a) or (d) of sub-rule (1) above, it shall within thirty days from the close of the f
No Nidhi shall --
(a) carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
(b) issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
(c) open any current account with its members;
1[(d) acquire or purchase securities of any other company 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;]
(e) carry on any business other than the business of borrowing or lending in its own name:
Provided that Nidhis 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 twenty per cent of the gross income of the Nidhi at any point of time during a financial year.
(f) accept de
(1) Every Nidhi shall issue 1[fully paid up] equity shares of the nominal value of not less than ten rupees each:
Provided that this requirement shall not apply to a company referred to in sub-rules
(a) and (b) of Rule 2.
(2) No service charge shall be levied for issue of shares.
(3) Every Nidhi shall allot to each deposit holder at least a minimum of ten equity shares or shares equivalent to one hundred rupees:
Provided that a savings account holder and a recurring deposit account holder shall hold at least one equity share of Rupees Ten.
(1) A Nidhi shall not admit a body corporate or trust as a member.
(2) 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.
(3) 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.
1[(4) A member shall not transfer more than fifty percent of his shareholding (as on the date of availing of loan or making of deposit) during the subsistence of such loan or deposit, as the case may be:
Provided that the member shall retain the minimum number of shares required under sub-rule (3) of Rule 7 at all times.]
Every Nidhi shall maintain Net Owned Funds (excluding the proceeds of any preference share capital) of not less than 1[twenty lakh] rupees or such higher amount as the Central Government may specify from time to time:
2[Provided that every Nidhi existing as on the date of commencement of the Nidhi (Amendment) Rules, 2022 shall comply with this requirement within a period of eighteen months from the date of such commencement.]
(1) A Nidhi may open branches, only if it has earned net profits after tax continuously during the preceding three financial years.
(2) Subject to the provisions contained in sub-rule (1), a Nidhi may open up to three branches within the district.
(3) 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 1[by applying in Form NDH-2 along with fee specified in the Companies (the Registration Offices and Fees) Rules, 2014] and an intimation is to be given to the Registrar about opening of every branch within thirty days of such opening.
(4) No Nidhi shall open branches 2[x x x x] outside the State where its registered office is situated.
(5) No Nidhi shall open branches 3[x x x x] called unless financial statement and annual return (up to date) are filed with the Registrar.
4[(6)(a) A Nidhi s
(1) A Nidhi shall not accept deposits exceeding twenty times of its Net Owned Funds (NOF) as per its last audited financial statements.
(2) In the case of companies covered under clauses (a) and (b) of Rule 2 and existing on or before 26th July, 2001 and which have accepted deposits in excess of the aforesaid limits, the same shall be restored to the prescribed limit by increasing the Net Owned Funds position or alternatively by reducing the deposit according to the table given below:
TABLE | |
Ratio of Net Owned Funds to Deposits (as on 31.3. 2013) | Date by which the company has to achieve prescribed ceiling of 1:20 |
(a) More than 1:20 but up to 1:35 | By 31.3. 2015 |
(b) More than 1:35 but up to 1:45 | |
(1) Every application form for placing a deposit with a Nidhi shall contain the following particulars, namely--
(a) Name of Nidhi;
(b) Date of incorporation of Nidhi;
1[(ba) The date of declaration or notification as Nidhi.]
(c) The business carried on by Nidhi with details of branches, if any;
(d) Brief particulars of the management of Nidhi (name, addresses and occupation of the directors, including DIN);
(e) Net profits of Nidhi before and after making provision for tax for the preceding three financial years;
(f) Dividend declared by Nidhi during the preceding three financial years;
(g) Mode of repayment of the deposit;
(h) Maturity period of the deposit;
(i) Interest payable on the deposit;
(j) The rate of interest payable to the depositor in case the depositor withdraws the deposit prematurely;
(k) The terms and conditions subject to which the deposit may be accepted or renewed;
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(1) The fixed deposits shall be accepted for a minimum period of six months and a maximum period of sixty months.
(2) Recurring deposits shall be accepted for a minimum period of twelve months and a maximum period of sixty months.
(3) 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.
(4) The maximum balance in a savings deposit account at any given time qualifying for interest shall not exceed one lakh rupees at any point of time and the rate of interest shall not exceed two per cent above the rate of interest payable on savings bank account by nationalised banks.
(5) A Nidhi may offer interest on fixed and recurring deposits at a rate not exceeding the maximum rate of interest prescribed by the Reserve Bank of India which the Non-Banking Financial Companies can pay on their public deposits.
(6) A fixed deposit account or a recu
Every Nidhi shall invest and continue to keep invested, in unencumbered term deposits with a Scheduled commercial bank (other than a co-operative bank or a regional rural bank), or post office deposits in its own name an amount which shall not be less than ten per cent of the deposits outstanding at the close of business on the last working day of the second preceding month:
Provided that in cases of unforeseen commitments, temporary withdrawal may be permitted with the prior approval of the Regional Director 1[by making application in Form NDH- 2 alongwith fee specified in the Companies (the Registration Offices and Fees) Rules, 2014] 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 ten per cent.
(1) A Nidhi shall provide loans only to its members:
1[Provided that in case of joint shareholders, the loan shall be provided to the member whose name appears first in the Register of members.]
(2) The loans given by a Nidhi to a member shall be subject to the following limits, namely--
(a) two lakh rupees, where the total amount of deposits of such Nidhi from its members is less than two crore rupees;
(b) seven lakh fifty thousand rupees, where the total amount of deposits of such Nidhi from its members is more than two crore rupees but less than twenty crore rupees;
(c) twelve lakh rupees, where the total amount of deposits of such Nidhi from its members is more than twenty crore rupees but less than fifty crore rupees; and
(d) fifteen lakh rupees, where the total amount of deposits of such Nidhi from its members is more than fifty crore rupees:
Provided that where a Nidhi has not made profits continuously in the three p
The rate of interest to be charged on any loan given by a Nidhi shall not exceed seven and half per cent above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing balance method:
Provided that Nidhi shall charge the same rate of interest on the borrowers in respect of the same class of loans and the rates of interest of all classes of loans shall be prominently displayed on the notice board at the registered office and each branch office of Nidhi.
(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 Section 152 of the Act and shall not have been disqualified from appointment as provided in Section 164 of the Act.
A Nidhi shall not declare dividend exceeding twenty five per cent in a financial year.]
(1) No Nidhi shall appoint or re-appoint an individual as auditor for more than one term of five consecutive years.
(2) 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:
Explanation.-- For the purposes of this proviso:
(i) 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;
(ii) appointment includes re-appointment.
(1) Every Nidhi shall adhere to the prudential norms for revenue recognition and classification of assets in respect of mortgage loans or jewel loans as contained hereunder.
(2) Income including interest or any other charges on non-performing assets shall be recognised only when it is actually realised and any such income recognised before the asset became non-performing and which remains unrealised in a year shall be reversed in the profit and loss account of the immediately succeeding year.
(3) (a) In respect of mortgage loans, the classification of assets and the provisioning required shall be as under:
Nature of Asset | Provision Required | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Standard Asset | No provision | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sub-standard Asset | 10% of the aggregate outstanding S.23 Filing of half yearly return.--Every company covered under Rule 2 shall file half yearly return with the Registrar in Form NDH-3 along with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 within thirty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice or cost accountant in practice. S.24 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. S.25 Power to enforce compliance.--(1) For the purposes of enforcing compliance 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. S.26 Compliance with Rule 3-A by certain Nidhis.--Every company referred to in clause (b) of Rule 2 and every Nidhi incorporated under the Act, before the commencement of Nidhi (Amendment) Rules, 2019, shall also get itself declared as such in accordance with Rule 3-A within a period of one year from the date of its incorporation or within a period of 2[nine months] from the date of commencement of Nidhi (Amendment) Rules, 2019, whichever is later: S.27 Companies declared as Nidhis under previous company law to file Form NDH-4.--Every company referred in clause (a) of Rule 2 shall file Form NDH-4 along with fees as per the Companies (Registration Offices and Fees) Rules, 2014 for updating its status: S.28 Penalty for non-compliance.--If a company falling under Rule 2 contravenes any of the provisions of the rules prescribed herein, the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees, and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which the contravention continues. S.Form No. NDH-1
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