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Central Government Amends Nidhi Rules, 2014 To Safeguard General Public Interest

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Central Government amends Nidhi Rules

The Ministry of Corporate Affairs has amended Nidhi Rules, 2014 to protect the public’s interests. Public companies wishing to operate as Nidhis must receive prior approval from the Central Government before receiving deposits, according to the rules.

Under the Companies Act, 2013, obtaining a declaration from the Central Government to operate as a Nidhi company was optional, but it is now made mandatory.

What is a Nidhi Company?

The Companies Act, 1956 defines a Nidhi or Mutual Benefit Society as a company that the Central Government declares a Nidhi or Mutual Benefit Society by notification in the official gazette.

Key Points:

In order to safeguard general public interest regarding this, a few necessary and significant amendments to the Nidhi Rules,2014 have been made, which will apply to companies formed after the Nidhi (amendment) Rule, 2022, as follows:

i.A Public Company incorporated as a Nidhi with a share capital of Rs. 10 lakhs must petition to the Central Government to be declared a Nidhi by filing form NDH-4 (Application for Declaration/ Updation of status of Nidhi) with a minimum membership of 200 and Net Owned Fund (NoF) of Rs. 20 lakhs within 120 days of its incorporation.

ii.The Promoters and Directors of the company must meet the criteria of the rules for being fit and proper individuals.

iii. The updated rules also specify that if the Central Government does not make a decision after 45 days of receiving applications filed by companies on form NDH-4, approval would be deemed granted. 

  • This provision is in place to ensure that permissions are granted in a timely manner.
  • It would be applicable to those Companies incorporated following the Nidhi (Amendment) Rules, 2022.

iv.After the amendment in the Companies Act, 2013 w.e.f. 15.08.2019 and resultant amendments in Nidhi Rules, 2014 w.e.f. 15.08.2019, companies incorporated as Nidhis were required to apply to the Central Government in Form NDH-4 for declaration within 14 months of incorporation, if they were incorporated after the commencement of the Nidhi (Amendment) Rules w.e.f 15.08.2019 and within 09 months of commencement of the Nidhi (Amendment) Rules w.e.f 15.08.2019, if they were incorporated as Nidhis after 2014 but prior to 15.08.2019.


The Ministry of Corporate Affairs has formed a committee to provide suggestions on the difficulties that have arisen as a result of the implementation of Companies Act, 2013.

i.And it was thought that the former provisions of the Companies Act of 1956, which required the consent of the Central Government for Nidhi declaration, were appropriate.

ii.It established a more centralised and restrictive structure for the regulation of such companies, and as a result, section 406 of the Companies Act, 2013 was amended with effect from August 15, 2019, to reinstate the requirement of the Central Government’s declaration as a Nidhi.


Under the Companies Act, 1956, about 390 companies were declared as Nidhi companies only. From 2014 to 2019, more than 10,000 companies were incorporated. However, only about 2,300 companies have applied on form NDH-4 for a declaration.