In this post we will discuss deposits accepted Nidhi companies.

Branches [Rule 10]

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 intimation is to be given to the Registrar about opening of every branch within thirty days of such opening.

No Nidhi shall open branches or collection centres or offices or deposit centres, or by whatever name called outside the State where its registered office is situated.

No Nidhi shall open branches or collection centres or offices or deposit centres, or by whatever name called unless financial statement and annual return (up to date) are filed with the Registrar.

A Nidhi shall not close any branch unless it.

  • 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;
  • 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
  • gives an intimation to the Registrar within thirty days of such closure.

Acceptance of deposits by Nidhis [Rule 11]

A Nidhi shall not accept deposits exceeding twenty times of its Net Owned Funds (NOF) as per its last audited financial statements.

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.


Ratio of Net Owned Funds to Deposits (as on 31.3. 2013) Date by which the company has toachieve 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 By 31.3. 2016
c) More than 1:45 By 31.3. 2017

The companies which are covered under the Table above shall not accept fresh deposits or renew existing deposits if such acceptance or renewal leads to violation of the prescribed ratio.

The ratio specified above shall also apply to incremental deposits.

Application form for deposit

Every application form for placing a deposit with a Nidhi shall contain the following particulars, namely:.

  • Name of Nidhi;
  • Date of incorporation of Nidhi;
  • The business carried on by Nidhi with details of branches, if any;
  • Brief particulars of the management of Nidhi (name, addresses and occupation of the directors, including DIN);
  • Net profits of Nidhi before and after making provision for tax for the preceding three financial years;
  • Dividend declared by Nidhi during the preceding three financial years;
  • Mode of repayment of the deposit;
  • Maturity period of the deposit;
  • Interest payable on the deposit;
  • The rate of interest payable to the depositor in case the depositor withdraws the deposit prematurely;
  • The terms and conditions subject to which the deposit may be accepted or renewed;
  • A summary of the financials of the company as per the latest two audited financial statements as given below:
    • Net Owned Funds
    • Deposits accepted
    • Deposits repaid
    • Deposits claimed but remaining unpaid
    • Loans disbursed against.
      • immovable property;
      • deposits; and
      • gold and jewellery
    • Profit before tax
    • Provision for tax
    • Profit after tax
    • Dividend per share
  • any other special features or terms and conditions subject to which the deposit is accepted or renewed.

The application form shall also contain the following statements, namely:.

  • in case of Non-payment of the deposit or part thereof as per the terms and conditions of such deposit, the depositor may approach the Registrar of companies having jurisdiction over Nidhi;
  • in case of any deficiency of Nidhi in servicing its depositors, the depositor may approach the National Consumers Disputes Redressal Forum, the State Consumers Disputes Redressal Forum or District Consumers Disputes Redressal Forum, as the case may be, for redressal of his relief;
  • a declaration by the Board of Directors to the effect that the financial position of Nidhi as disclosed and the representations made in the application form are true and correct and that Nidhi has complied with all the applicable rules;
  • a statement to the effect that the Central Government does not undertake any responsibility for the financial soundness of Nidhi or for the correctness of any of the statement or the representations made or opinions expressed by Nidhi;
  • the deposits accepted by Nidhi are not insured and the repayment of deposits is not guaranteed by either the Central Government or the Reserve Bank of India; and
  • a verification clause by the depositor stating that he had read and understood the financial and other particulars furnished and representations made by Nidhi in his application form and after careful consideration he is making the deposit with Nidhi at his own risk and volition.

Every Nidhi shall obtain proper introduction of new depositors before opening their accounts or accepting their deposits and keep on its record the evidence on which it has relied upon for the purpose of such introduction.

For the purposes of introduction of depositors, a Nidhi shall obtain documentary evidence of the depositor in the form of proof of identity and address as under:

  1. Proof of Identity (any one of the following)
    1. Passport
    2. Unique Identification Number
    3. Income-tax PAN card
    4. Elector Photo Identity Card
    5. Driving licence
    6. Ration card
  2. Proof of address (any one of the following)
    1. Passport
    2. Unique Identification Number
    3. Elector Photo Identity Card
    4. Driving licence
    5. Ration card
    6. Telephone bill
    7. Bank account statement
    8. Electricity bill

(documents referred to serial numbers (vi), (vii) and (viii) above shall not be more than two months old)

Deposits [Rule 13]

The fixed deposits shall be accepted for a minimum period of six months and a maximum period of sixty months.

Recurring deposits shall be accepted for a minimum period of twelve months and a maximum period of sixty months.

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.

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.

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.

A fixed deposit account or a recurring deposit account shall be foreclosed by the depositor subject to the following conditions, namely:.

  • a Nidhi shall not repay any deposit within a period of three months from the date of its acceptance;
  • where at the request of the depositor, a Nidhi repays any deposit after a period of three months, the depositor shall not be entitled to any interest up to six months from the date of deposit;
  • where at the request of the depositor, a Nidhi makes repayment of a deposit before the expiry of the period for which such deposit was accepted by Nidhi, the rate of interest payable by Nidhi on such deposit shall be reduced by two per cent from the rate which Nidhi would have ordinarily paid, had the deposit been accepted for the period for which such deposit had run. In the event of death of a depositor, the deposit may be repaid prematurely to the surviving depositor or depositors in the case of joint holding with survivor clause, or to the nominee or to legal heir with interest up to the date of repayment at the rate which the company would have ordinarily paid, had such deposit been accepted for the period for which such deposit had run.

Un-encumbered term deposits [Rule 14]

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. In cases of unforeseen commitments, temporary withdrawal may be permitted with the prior approval of the Regional Director 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.

Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.



  1. Hasan Bariawala

    Though Nidhi company can not open branch offices in other states, can it accept deposits from people residing in other states ?


  2. Pingback: Index of Companies Law Posts | AishMGhrana

  3. Sir what is unencumbered term deposit?


    • A Term deposit in bank is assets of a person which in this case is company.
      When company offer such assets as security for some loan or borrowing such assets is called encumbered assets.
      So, terms deposits not offered as securities for any purpose is encumbered term deposits.


  4. If NDH 1 is to be prepared for the period ending on 3/12/2016, then as of which date should the uncumbered deposits be maintained in the bank?


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  7. Jst a copy n paste. No analysis


    • Dear
      When a Rule seems self explanatory and procedural, I see no need for analysis. However, such posts requires to complement other posts on same subject matter.
      If you have any specific query, please feel free to ask in comments.


No professional query in comments (but in mail). Only academic discussion here. Comments moderated. Sometime, I reply to your mail ID.

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