October 7, 2026 · Guides

Nidhi Act and Nidhi Rules 2014 Explained

If you search for the Nidhi Act, you will not find a standalone statute by that name. The nidhi company act, in practice, is Section 406 of the Companies Act, 2013 read with the Nidhi Rules, 2014, which have been amended since. This post maps the rules to the questions promoters actually have.

In this guide

Is there a Nidhi Act?
How the Rules have changed
Which Rule covers what
The conditions at the centre
Penalties and where to read the current text
FAQs

Is there a Nidhi Act?

No. A Nidhi is a company, so the Companies Act, 2013 applies to it like any other company, with extra conditions layered on top. The source of those conditions is Section 406, which deals with Nidhi and mutual benefit companies, and the Nidhi Rules, 2014 framed under it. Our post on Nidhi company under Section 406 covers the section itself.

If you are new to the idea, start with what is a Nidhi company, then come back here for the rulebook.

How the Rules have changed

The Rules came out in 2014 and were amended in 2019 and again in 2022 (GSR 301(E), dated 19 April 2022). The 2022 changes are the ones that matter most for anyone incorporating today:

Minimum paid-up equity capital raised from Rs 5 lakh to Rs 10 lakh
NDH-4 declaration to be applied for within 120 days of incorporation, with a 45-day decision window (Rule 3B)
NOF requirement for the declaration raised from Rs 10 lakh to Rs 20 lakh, along with at least 200 members
Fit and proper criteria for promoters and directors
Permission to borrow from banks and financial institutions to lend to members

Older blog posts, including some of ours, may still show the pre-2022 figures, so always check the date.

Which Rule covers what

Rule	Subject
Rule 3B	NDH-4 declaration by the Central Government
Rule 4	Name must end with “Nidhi Limited”; public company
Rule 6	Prohibited activities
Rule 13	Acceptance of deposits
Rule 14	NOF to deposit ratio and unencumbered term deposits
Rules 15 and 16	Loans to members and security
Rule 21	Half-yearly return NDH-3
Rule 24	Penalty for default

We read the deposit rules in deposit rules for Nidhi companies, lending in loan rules, and the ceiling on interest and the bank deposit requirement in interest limits and unencumbered deposits.

The conditions at the centre

Strip the Rules down and a handful of ideas remain. A Nidhi is a public company with a single object: thrift and savings among members. It takes deposits from and lends to members only. It must reach 200 members and NOF of Rs 20 lakh for the declaration, keep NOF to deposits within 1:20, and hold unencumbered term deposits of at least 10% of deposits. It cannot run chit funds, hire purchase or leasing, advertise for deposits, or lend to bodies corporate.

None of this makes it an NBFC. It is not registered with RBI and answers to the MCA instead.

Penalties and where to read the current text

Under Rule 24, default can attract a fine of up to Rs 5,000 plus up to Rs 500 for every day the default continues. NDH-3 is due within 30 days of each half-year end, so late filing adds up quickly.

Treat the details in any blog, ours included, as a summary. The authoritative text is the Rules as notified and published on the MCA website, and amendments can change thresholds. For a company-specific read, see our Nidhi registration service or the full registration guide.

Need help with your Nidhi company? See our Nidhi company registration service, call +91 93117 95484, or write to mail@taxhint.in.

FAQs

Is there a separate Nidhi Act in India?

No. Nidhi companies are governed by the Companies Act, 2013, mainly Section 406, together with the Nidhi Rules, 2014 as amended.

Which amendments matter for new Nidhi companies?

The 2022 amendment (19 April 2022) raised paid-up capital to Rs 10 lakh, introduced the NDH-4 declaration within 120 days and lifted the NOF requirement to Rs 20 lakh.

What is the penalty for breaking the Nidhi Rules?

Rule 24 provides a fine of up to Rs 5,000 and up to Rs 500 per day while the default continues. Check the current text on the MCA website before relying on these amounts.

Does the RBI regulate a Nidhi under these Rules?

No. A Nidhi is not an NBFC registered with RBI. It is overseen through the MCA, including the Registrar, Regional Director and Central Government.