Nidhi Amendments Rules, What is a Nidhi Company, Amendments made in the Nidhi Company, Ebizfiling

What is a Nidhi Company? And Nidhi Amendments Rules

Everything you need to know about Nidhi Amendments Rules, 2022


The Nidhi Rules, 2014 were changed by the Ministry of Corporate Affairs in a notification dated April 19,2022. This article main focuses on Nidhi Amendments Rules, 2022. Before going through the amendments made in the Nidhi company, let’s have a quick look at “What is a Nidhi Company?”

What is a Nidhi Company?

“Nidhi” is a Hindi word, which means finance or fund. Nidhi Company Registration is done with an intention to cultivating savings among members and to providing finance among members only. It is allowed to take loans from members and can lend to only members. Hence, it cannot accept deposits or lend from/to non-members.

Advantages of Nidhi Company

  • Formation of Nidhi Company is an easy process.
  • The capital required for a Nidhi Company is very less compared to other types of business structure.
  • Nidhi Company though it is a finance company and falls under the category of NBFC, does not require approval of RBI.
  • The outsider will not be allowed to intervene in Nidhi in any ways. Be it working for the Nidhi companies or depositing money with them or even avail credit from Nidhi.
  • As the funds raised are limited, the availability of the credit will also be limited as compared to the other finance companies.

Important points related to Nidhi Amendments Rules, 2022

  • A minimum paid-up capital of ten lacs is required.
  • Within 120 days of incorporation, file an application form in NDH-4.
  • An application needs to be approved by the Central Government within 45 days.
  • Twenty lacs to be kept in a net-owned fund.
  • A Nidhi company must implement the amendments made in the Nidhi rules 2022, after company incorporation.

Amendments made in the Nidhi Company Rules, 2014 with the Introduction of Nidhi Company Rules

Restrictions on raising deposits or making loans, as well as their violation


According to the fourth proviso, the company is not permitted to solicit deposits from its members or to make any loans to them if:

  1. The company fails to meet the requirements of rule 3A; or the company fails to meet the requirements of the Nidhi (Amendment) Rules, 2022; or the Central Government rejects the company’s application in Form NDH-4.
  2. According to the fifth proviso, any deposit raised by the corporation is presumed to be raised in accordance with Chapter V of the Act.
  3. The sixth proviso specifies that the provisions of rule 3A would not apply to firms formed as Nidhi on or after the Nidhi (Amendment) Rules, 2022 take effect.

Filing of a declaration as a Nidhi Company by the Public Company 

The filing of a Nidhi declaration by a public business:


According to newly added regulation 3B, a public corporation wishing to be certified a Nidhi must do the following steps:

  1. Within 120 days of the company’s establishment, submit Form NDH-4;
  2. Comply with the following requirements: the company must have a minimum of 200 members and Net Owned Funds of INR 20 lakhs or more.
  3. Attach a declaration along with Form NDH-4 stating that all of the company’s directors and promoters meet the ‘Fit and Proper Person’ standards (described below).
  • Fit and Proper Person standards:

In assessing the ‘Fit and Proper Person’ criteria for directors and promoters, the following factors must be considered:

    • The person’s integrity, ethical behavior, reputation, fairness, character, and honesty
    • The person should not be disqualified by any of the following factors that is listed below:
      1. Any criminal complaint/information is filed and pending against such an individual by a person authorized by the Central Government under section 154 of the Code of Criminal Procedure.
      2. Any enforcement agency has filed and is pending a charge sheet against such a person in any matter connected to economic crimes.
      3. Any regulatory authority/enforcement agency issues an order of restraint, prohibition, or debarment against such individual in any subject connected to company law, securities law, or financial markets.
      4. A court issues a conviction order against such a person for a crime involving moral turpitude.
      5. The person has been declared insolvent but has not yet been released.
      6. The person was determined to be of unsound mind by a court of competent jurisdiction, and that finding is still in effect.
      7. The individual is classified as a willful defaulter.
      8. A fugitive economic offender has been declared.
      9. The person is a director of five or more firms, or the promoter of three or more companies that are Nidhi-incorporated or declared.

Processing of application field in form NDH 4 

After the public firm files Form NDH-4, the application will be processed as follows:

  • The Central Government will review and assess the application; the Central Government will notify the company of its decision, whether to approve or reject the application, within 45 days.
  • Notably, if the decision is not communicated within 45 days, the application will be considered granted.
  • After the Central Government approves the application, the firm must file it with the Registrar along with Form 20A.
  • If the Central Government is satisfied, the company will be declared a Nidhi Company in the official Gazette.

It is crucial that the provisions of Rule 3B will not apply to public companies formed before the implementation of the amendments made in the Nidhi Amendments Rules, 2022.

Changes in the rules for Closing of the branch by Nidhi Company

According to the Companies (Registration Offices and Fee) Rules, 2014, a Nidhi company may not close a branch unless the proposal to close the branch, along with a plan for paying existing deposits and recovering existing loans, has been approved by the Board of Directors in a meeting and has received the prior approval of the Regional Director. Within 30 days of receiving the application, the regional director must issue an approval order.


After receiving approval from the Regional Director, the Nidhi Company must publish in the local newspaper at its place of business prior to 30 days of closure, as well as post a copy of the closure notice on the Nidhi Company’s notice board for thirty days from the date of publication, and notify the Registrar within 30 days of closure.


Furthermore, any location that is not a registered office or branch where a Nidhi Company conducts business must be closed within six months after the enforcement of the Nidhi Company New Rules 2022 and must be reported to the Registrar.


Other Amendments

  1. Definition of the term “branch”- As a result, the term “Branch” refers to any location other than Nidhi’s registered office.
  2. Increase in the minimum paid-up equity share capital – The Nidhi’s minimum paid-up equity share capital requirement has been raised from INR 5 lakhs to INR 10 lakhs.
  3. In the event of current Nidhi, the above-mentioned condition must be met within 18 months.
  4. Increase in the amount of Net Owned Fund, the Nidhi’s Net Owned Fund requirement has been raised from INR 10 lakhs to INR 20 lakhs.
  5. Dividend declaration Under new rule 18, a Nidhi can declare a maximum dividend of 25% in a Financial Year. Some of the prerequisites for declaring the dividend are noticeably omitted.


The Nidhi Company New Rules are an update to the Nidhi Amendments Rules, which were last updated in 2014. The Nidhi Company New Rules are in place for the public good, and the main focus is on the declaration that any organization must receive from the central government in order to form a Nidhi company. Obtaining such a declaration was previously required by the old rule, but no one followed it, thus it has now been made necessary. The rigorous standards are enforced in order for the entity to comply with them, as they previously skipped the part of taking the Central Government’s declaration.

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Author: zarana-mehta

Zarana Mehta is an MBA in Finance from Gujarat Technology University. Though having a masters degree in Business Administration, her upbeat and optimistic approach for changes led her to pursue her passion i.e. Creative writing. She is currently working as Content Writer at Ebizfiling.

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