In exercise of the powers conferred under
sub-section (1) of section 406 read with sub-sections (1) and (2) of
469 of the Companies Act,2013, the Central Government hereby makes the
following rules for nidhi companies, namely:-
- Short title and commencement – (1) These Rules may be called Nidhi Rules, 2014.
(2) They shall come into force on the date of their publication in the Official Gazette.
- Application – 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
620A 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 620A of the Companies Act, 1956; and
(c) every company incorporated as a Nidhi pursuant to the provisions of section 406 of the Act.
- Definitions – (1) In these rules, unless the context otherwise requires,-
Provided that the amount representing the
proceeds of issue of preference shares shall not be included for
calculating Net Owned Funds.
(f) “Standard Asset” means the asset in
respect of which no default in repayment of principal or payment of
interest has occurred or is perceived and which has neither shown signs
of any problem relating to repayment of principal sum or interest nor
does it carry more than normal risk attached to the business;
Provided that reschedulement or
renegotiation or rephasement of the loan instalment or interest payment
shall not change the classification of an asset unless the borrowal
account has satisfactorily performed for at least twelve months after
such reschedulement or renegotiation or rephasement.
- Incorporation and incidental matters – (1) A Nidhi to be incorporated under the Act shall be a public company and shall have a minimum paid up equity share capital of five lakh rupees.
(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 Company incorporated as a “Nidhi” shall have the last words ‘Nidhi Limited’ as part of its name.
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- Requirements for minimum number of members, net owned fund etc – (1) Every Nidhi shall, within a period of one year from the commencement of these rules, 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.
(4) If the failure to comply with
sub-rule (1) of this rule extends beyond the second financial year,
Nidhi shall not accept any further deposits from the commencement of the
second financial year till it complies with the provisions contained in
sub-rule (1), besides being liable for penal consequences as provided
in the Act.
- General restrictions or prohibitions – 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;
(d) 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;
Explanation – For the purposes of this sub-rule, “control” shall have the same meaning assigned to it in clause (27) of section 2 of the Act;
(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 deposits from or lend to any person, other than its members;
(g) pledge any of the assets lodged by its members as security;
(h) take deposits from or lend money to any body corporate;
(i) enter into any partnership arrangement in its borrowing or lending activities;
(j) issue or cause to be issued any advertisement in any form for soliciting deposit:
Provided that private circulation of the
details of fixed deposit schemes among the members of the Nidhi carrying
the words “for private circulation to members only” shall not be
considered to be an advertisement for soliciting deposits.
(k) pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans.
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- Share capital and allotment –
(1) Every Nidhi shall issue equity shares of the nominal value of not less than ten rupees each:
Provided that this requirement shall not apply to a company referred toin 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.
- Membership – (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.
- Net owned funds – Every Nidhi shall maintain Net Owned Funds (excluding the proceeds of any preference share capital) of not less than ten lakh rupees or such higher amount as the Central Government may specify from time to time.
- Branches – (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 upto 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 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 or collection centres or offices or
deposit centres, or by whatever name called outside the State where its
registered office is situated.
(5) 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.
(6) 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.
-
Acceptance of deposits by Nidhis
(1) A Nidhi shall not accept deposits exceeding twenty times of its Net Owned Funds (NOF) as per its last audited financial statements.
| 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 upto 1:35 | By 31.3. 2015 |
| b) More than 1:35 but upto 1:45 | By 31.3. 2016 |
| c) More than 1:45 | By 31.3. 2017 |
(3) The companies which are covered under the Table in sub-rule (2)above
shall not accept fresh deposits or renew existing deposits if such
acceptance or renewal leads to violation of the prescribed ratio.
(4) The ratio specified in sub-rule (2) above shall also apply to incremental deposits.
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- Application form for deposit – (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;
(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;
(l) A summary of the financials of the company as per the latest two audited financial statements as given below:
(i) Net Owned Funds
(ii) Deposits accepted
(iii) Deposits repaid
(iv) Deposits claimed but remaining unpaid
(v) Loans disbursed against-
(a) immovable property;
(b) deposits; and
(c) gold and jewellery
(vi) Profit before tax
(vii) Provision for tax
(viii) Profit after tax
(ix) Dividend per share
(m) any other special features or terms and conditions subject to which the deposit is accepted or renewed.
(2) The application form shall also contain the following statements, namely:-
(a) 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;
(b) 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;
(c) 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;
(d) 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;
(e) 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
(f) 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.
(3) 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.
(a) Proof of Identity (any one of the following)
(i) Passport
(ii) Unique Identification Number
(iii) Income-tax PAN card
(iv) Elector Photo Identity Card
(v) Driving licence
(vi) Ration card
(b) Proof of address (any one of the following)
(i) Passport
(ii) Unique Identification Number
(iii) Elector Photo Identity Card
(iv) Driving licence
(v) Ration card
(vi) Telephone bill
(vii) Bank account statement
(viii) Electricity bill
(documents referred to serial numbers (vi), (vii) and (viii) above shall not be more than two months old).
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- Deposits –
(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 twelvemonths 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 ofIndia which the Non-Banking
Financial Companies can pay on their public deposits.
(6) A fixed deposit account or a
recurring deposit account shall be foreclosed by the depositor subject
to the following conditions, namely:-
(a) a Nidhi shall not repay any deposit within a period of three months from the date of its acceptance;
(b) 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;
(c) 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:
Provided that 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 – 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 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.
- Loans –
(1) A Nidhi shall provide loans only to its 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 preceding financial years, it shall
not make any fresh loans exceeding fifty per cent. of the maximum
amounts of loans specified in clauses (a), (b), (c) or (d).
Provided further that a member shall not
be eligible for any further loan if he has borrowed any earlier loan
from the Nidhi and has defaulted in repayment of such loan.
(3) For the purposes of sub-rule (2), the
amount of deposits shall be calculated on the basis of the last audited
annual financial statements.
(4) A Nidhi shall give loans to its members only against the following securities, namely:-
(a) gold, silver and jewellery:
Provided that the repayment period of such loan shall not exceed one year.
(b) immovable property:
Provided that the total loans against
immovable property [excluding mortgage loans granted on the security of
property by registered mortgage, being a registered mortgage under
section 69 of the Transfer of Property Act, 1882 (IV of 1882)] shall not
exceed fifty per cent. of the overall loan outstanding on the date of
approval by the board, the individual loan shall not exceed fifty per
cent. of the value of property offered as security and the period of
repayment of such loan shall not exceed seven years.
(c) fixed deposit receipts, National Savings Certificates, other Government Securities and insurance policies:
Provided that such securities duly
discharged shall be pledged with Nidhi and the maturity date of such
securities shall not fall beyond the loan period or one year whichever
is earlier:
Provided further that in the case of loan
against fixed deposits, the period of loan shall not exceed the
unexpired period of the fixed deposits.
- Rate of interest – 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.
- 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
section 152 of the Act and shall not have been disqualified from
appointment as provided in section 164 of the Act.
- Dividend.- A Nidhi shall not declare dividend exceeding twenty five per cent. or such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in writing and further subject to the following conditions, namely:-
(a) an equal amount is transferred to General Reserve;
(b) there has been no default in repayment of matured deposits and interest; and
(c) it has complied with all the rules as applicable to Nidhis.
- Auditor:- (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 provison:
(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.
- Prudential norms – (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 amount |
| Doubtful Asset | 25% of the aggregate outstanding amount |
| Loss Asset | 100% of the aggregate outstanding amount |
Provided that a Nidhi may make provision for exceeding the percentage specific herein.
(b) The estimated realisable value of the collateral security to which a
Nidhi has valid recourse may be reduced from the aggregate outstanding
amount,if the proceedings for the sale of the mortgaged property have
been initiated in a court of law within the previous two years of the
interest, income or instalment remaining unrealised.
(4) In case of companies which were incorporated on or before
26-07-2001, such companies shall make provisions in respect of loans
disbursed and outstanding as on 31-03-2002 for income reversal and
non-performing assets as per table given below:
| For the year ended | Extent of provision |
| 31-03- 2015 | Un-provided balance on equal basis over the three |
| 31-03- 2016 | |
| 31-03- 2017 | years as specified in the preceding column. |
(5) (a) The Notes on the financial statements of a year shall disclose-
(i) the total amount of provisions, if
any, to be made on account of income reversal and non-performing assets
remaining unrealised;
(ii) the cumulative amount provided till the previous year;
(iii) the amount provided in the current year; and
(iv) the balance amount to be provided.
(b) Such disclosure shall continue to be made until the entire amount to be provided has been provided for.
(6) In respect of loans against gold or jewellery-
(a) the aggregate amount of loan
outstanding against the security of gold or jewellery shall either be
recovered or renewed within three months from the due date of repayment;
(b) if the loan is not recovered or
renewed and the security is not sold within the aforesaid period of
three months, the company shall make provision in the current year’s
financial statements to the extent of unrealised amount or the aggregate
outstanding amount of loan including interest as applicable;
(c) no income shall be recognised on such
loans outstanding after the expiry of the three months period specified
in (a) above or sale of gold or jewellery, whichever is earlier; and
(d) the loan to value ratio shall not exceed 80 percent.
Explanation.- For the purposes of this
rule, the term ‘loan to value ratio’ means the ratio between the amount
of loan given and the value of gold or jewellery against which such loan
is given.
- Filing of half yearly return.- Every company covered under rule 2shall 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.
- 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.
- 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.
(2) In respect of any Nidhi which has violated these rules or has failed
to function in terms of the Memorandum and Articles of Association, the
concerned Regional Director may appoint a Special Officer to take over
the management of Nidhi and such Special Officer shall function as per
the guidelines given by such Regional Director:
Provided that an opportunity of being
heard shall be given to the concerned Nidhi by the Regional Director
before appointing any Special Officer.
24. 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.
