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October 7, 2026 · Guides

Loan Rules for Nidhi Companies: What They Can Lend Against

The nidhi company loan rules are where a Nidhi earns its income and where most inspection queries land. A Nidhi may lend to its members only, against acceptable security, within limits that grow with the size of its deposits. The numbers below are as we read the Rules, so please confirm the current text before you sanction a loan.

In this guide

Who can borrow

Loans go to members only. A Nidhi cannot lend to bodies corporate and cannot lend to the public, even against excellent security. As with deposits, the borrower should be on the register before the loan is sanctioned. See our post on who can be a member of a Nidhi company.

How much one member can borrow

The ceiling for a single member depends on the Nidhi’s deposits.

Deposits of the NidhiMaximum loan per member
Below Rs 2 croreRs 2 lakh
Rs 2 crore to Rs 20 croreRs 7.5 lakh
Rs 20 crore to Rs 50 croreRs 12 lakh
Above Rs 50 croreRs 15 lakh

A young Nidhi therefore starts with small-ticket lending, and the limits widen only as the deposit base grows.

What a Nidhi can lend against

Loans must be secured. The usual forms of security are:

  • Gold and jewellery, with repayment within 1 year.
  • Immovable property, with a longer term of up to 7 years. Loans against property are limited to 50% of loans outstanding.
  • The member’s own fixed deposits with the Nidhi.
  • Government securities.
  • Insurance policies.

Unsecured personal loans are not on that list, so do not build a product around them.

Interest on loans

A Nidhi may not charge more than 7.5% above the highest rate it pays on deposits, and interest is charged on a reducing balance rather than a flat rate. The worked example is simple. If your highest deposit rate is 8%, the loan rate cannot go above 15.5%. We explain how the deposit side of this works in interest limits and unencumbered deposits.

What a Nidhi must not lend into

Rule 6 bars chit funds, hire purchase, leasing, insurance business, buying securities and debentures, and lending to bodies corporate. After the 2022 amendment a Nidhi may borrow from banks and financial institutions in order to lend to members, but it still cannot take deposits from outsiders. For the full list of limits, see the Nidhi Act and Rules 2014 explainer and the matching deposit rules.

Keeping loan records clean

Keep a loan file for each member: application, KYC, valuation or security documents, sanction note, repayment schedule and closure papers. A mismatch between the loan register and the books is the quickest way to draw an auditor’s attention. Always check the current Rule and MCA portal before you change your lending policy.

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

FAQs

Who can a Nidhi company lend to?

Members only. Lending to non-members or to bodies corporate is prohibited.

What is the maximum loan a Nidhi can give one member?

It depends on deposits: Rs 2 lakh below Rs 2 crore, Rs 7.5 lakh for Rs 2 to 20 crore, Rs 12 lakh for Rs 20 to 50 crore and Rs 15 lakh above Rs 50 crore.

Can a Nidhi give a loan against gold or property?

Yes. Gold loans are repayable within a year, and property loans can run up to 7 years but are limited to 50% of loans outstanding.

What is the maximum interest a Nidhi can charge on loans?

Not more than 7.5% above its highest deposit rate, on a reducing balance. Check the current Rule before fixing your rate card.

More in this Nidhi series