Nidhi rules, 2014

Nidhi

These rules may be called Nidhi Rules, 2014

In the official gazette on their publication date they shall come into force.

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 620 A of the Companies Act, 1956; and

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 620 A of the Companies Act, 1956; and

Every incorporated company as a Nidhi pursuant of section 406 of the Act to the provisions.

In these rules, unless otherwise the context needs.

“Act” means the Companies Act, 2013 (18 of 2013).

” Doubtful Asset ” means a account borrowal which has remained a non performing asset for more than two years but less than three years;

“Loss Asset” means a borrowal account that has remained a non-performing asset for more than three years or where in the Board opinion, a shortfall in the loan account recovery is expected because the executed documents may become invalid if subjected to legal process or for any other reason.

“Net owned funds” means the paid up equity share capital aggregate and reserves free as reduced by accumulated losses and intangible assets appearing in the balance sheet last audited.

Provided that the representing amount the issue proceeds of preference shares shall not be included for Net Owned funds calculating.

“Non-performing asset” means a borrowed account in accordance of which interest income or loan installment towards repayment of principal amount has unrealized remained for twelve months.

“Standard Asset” means the asset in accordance of which no default in repayment of principal or interest payment has occurred or is perceived and which has neither shows any problem signs relating to repayment of sum of principal or interest nor does it carry more than attached normal risk to the business attached.

” Sub- Standard Asset” means a borrowal account which is non-performing asset;

Given that reschedulement or renegotiation or the loan rephasement installment or payment of interest shall not change an asset classification unless the borrowal account has performed satisfactorily for at least twelve months after such rephasement or reschedulement or renegotiation.

Words and expressions herein used, but not mentioned in these rules and defined in the Act or in the Companies (Specifications of Definition Details) Rules, 2014 shall have the meaning which is same as declared to them in the Act or in the mentioned rules.

Incidental matters and incorporation.

A Nidhi to be incorporated under the Act shall be a public company and shall have a minimum paid up equity of five lakh rupees share capital.

On and after the Act commencement, no Nidhi shall issue the shares preference.

If preference shares had been given by a Nidhi before this Act commencement, such preference shares shall be redeemed in accordance of such shares with the terms.

Except as mentioned under the proviso to sub-rule (e) to rule 6, no Nidhi shall have any object in its Memorandum of Association other than the cultivating object the habit of thrift and its members savings receiving deposits from, and leading to, its only members for their mutual benefit.

Every incorporated company as a “Nidhi” shall have the last words “Nidhi Limited” of its name as part.

Requirements for members minimum number, net owned fund etc.

Every nidhi shall, within a one year period from these rules commencement, ensure that it has–

a, not less than members two thousand;

b, Net owned Fund of ten lakh rupees or more.

c, unencumbered days from the close of the first financial years first after its incorporation and where applicable, the second financial year; Nidhi shall file a return of statutory compliance’s in Form NDH-1 along as provided with such fee in Companies (Registration fees and offices) Rules, 2014 with the registrar duly certified by a secretary of the company in practice or chartered accountant in practice or a cost accountant in practice.

For the purpose of this rule “Regional director” means the appointed person by the Central Government in the Ministry of Corporate Affairs as a Regional Director.

If the failure to comply with sub-rule (1) of this rule extends beyond the financial year second, Nidhi shall not accept any deposits further from the commencement of the second financial year till it complies with the provisions contained in sub-rue (1), being liable besides for penal consequences as given in the Act.

General restrictions or prohibitions.

No Nidhi shall not accept deposits twenty times exceeding of its Net Owned Funds (NOF) as per its last audited financial statements.

In the companies case, covered under clauses (a) and (b) of rule 2 and existing on or before 26th July 2001 and which have deposits accepted in excess of the limits aforesaid, the same shall be resolved to the limit prescribed by increasing the position of Net Owned Funds position or alternatively by reducing the deposit according to the taken represented below.

The company registration for companies that are covered under the Table in sub-rule (2) above shall not accepts deposits that is fresh or existing deposits renew if such acceptance or leads renewal to violation of the ratio prescribed.

The ratio mentioned in sub-rule (2) above shall apply also to deposits incremental.

a, carry on the chit fund business, hire purchase finance, lease finance, insurance or securities acquisition issued by any body corporate.

b, issue preference shares, any other debt instrument or debentures or any name or whatsoever in any form.

c, open with its members any current account.

d, acquire another company for company registration for company purpose securities purchase or control the Board of Directors composition of any other company in any manner whatsoever or enter into any arrangement of its management for the change, unless it has passed a special resolution in its meeting general and also get the previous approval of the Regional Director having jurisdiction over such Nidhi;

e, carry on any business other than the borrowing business or lending in its own name:

Provided that Nidhis that have adhered to all the provisions of these rules may give locker facilities on rent to its subject members to the rental income from facilities such not exceeding twenty per cent of the gross income of the Nidhi at any point of time during a financial year.

Accept deposits from or lend to any person, other than its members;

Pledge any of the lodged assets by its members as security;

Take deposits from or to any body corporate lend money.

Enter into arrangement partnership in its borrowing or lending activities;

Provided that the details private circulation of fixed deposits schemes among the Members of the Nidhi carrying the words “for private circulation to only members shall not be considered for soliciting deposits to be an advertisement.

Pay any brokerage or for mobilizing deposits incentive from members or for deployment of funds or for granting loans.

Share allotment and capital

Every Nidhi shall issue equity shares of the nominal value of not less than each of rupees ten.

Provided that this requirement need not apply to a referred company to in sub-rules (a) and (b) of rule 2.

No service charge shall be levied for shares issue.

Every Nidhi shall allot to deposit each holder at least minimum of equity shares ten or equivalent shares to rupees one hundred.

Given that a savings account holder and a recurring deposit of account holder shall hold at least ten rupees of equity shares.

Membership

A nidhi shall not permit a body corporate or as a trust member.

Except as permitted otherwise under these rules, every Nidhi shall make sure that its membership is not minimized to less than two hundred members at any time.

A minor shall not be admitted as a Nidhi member.

Given that the deposits may be accepted in a minor name if they are made by the legal guardian o natural who is a Nidhi member.

Net owned funds

Every Nidhi shall safeguard Net Owned Funds (excluding the proceeds of any share capital preference) of not less than rupees ten lakh or such higher amount as the Central Government may indicate from time to time.

Branches.

A Nidhi may open branches, only if it has net profits earned after continuously tax during the preceding three financial years.

Subject to the provisions mentioned in sub-rule(1), a Nidhi may open up to three branches within district.

If a Nidhi proposes to open more than branches three within the district or any branches outside the district, it shall obtain the prior permission of the regional director and an intimation is to given to the registrar about every branch opening within thirty days of opening such.

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

No nidhi shall open branches or collection centres or deposit centres or offices or by whatever name called unless financial statement and annual return upto date are filed with the registrar.

Unless a Nidhi shall not close any branch.

a, publishes an newspaper advertisement o a informing notice such branch closure on the notice Board for Nidhi for a period of at least thirty days from the date on which advertisement was publsihed under clause (a); and

issues an intimation to the registrar of such closure within thirty days.

Acceptance of deposits by Nidhis.

A Nidhi shall not accept deposits exceeding NOF twenty times as per its last audited financial statements.


In the companies clauses covered under clauses (a) and (b) of the rule 2 and existing on or before 26th July 2001 and which have accepted deposits in the aforesaid limits excess, the same shall be restored to the limit prescribed by the increasing Netowned Funds position or alternatively by diminishing the deposit according to the table mentioned below

Ratio of Net owned Funds to Deposits Date by which the company has to get prescribed ceiling of 1:20.

a, Morethan 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.

The companies that are covered in sub-rule (2) under the table above shall not accept fresh deposits or renew deposits existing if such acceptance or renewal leads of the ratio prescribed to the violation.

The ratio specified in sub-rule (2)above shall also apply to incremental deposits.

Application form for deposit.

Every form of application for placing a deposit with a Nidhi shall contain the particulars following, namely;-

a, Name of Nidhi;

b, Nidhi date of incorporation;
c, The carried business on by Nidhi with branch details, if any;

d, Brief particulars of the Nidhi management (addresses, name and the directors occupation, including DIN);

e, Nidhi net profits before and after making provision for tax for the preceding three financial years;

f, Declared dividend by Nidhi during the preceding three financial years;

g, Mode of the deposit payment;

h, The deposit maturity period;

i, The interest payable on deposit;

j, The interest rate payable to the depositor in case the depositor withdraws prematurely the deposit.

k, The conditions and terms subject to which the deposit may be renewed or accepted.

l, A summary of the company financials as per the latest two financial statements audited as mentioned below.

i, Net owned funds

ii, Accepted deposits

iii, Repaid deposits.

iv, Claimed deposits but remaining not paid

v, Against disbursed loans

a, immovable property;

b, deposits; and

c, Jewellery and gold.

vi, before tax profits

vii, Provision for tax,

viii, Profit after tax

ix, Dividend per share.

m, Any other features that is special or terms and subject conditions to which the deposit is removed or accepted.

2. The application form may also contain the statements following namely,

a, in case of the deposit non-payment or thereof part as per the conditions and terms of such deposit, the depositor may approach the companies registrar having jurisdiction over Nidhi;

b, In case of deficiency of Nidhi in servicing its depositors, the depositor may approach the redressal forum of National Consumers Disputes , the State Consumers Disputes Redressal Forum or District Consumers Disputes Redressal Forum, as may be the case, for redressal of his relief;

c, a declaration by the directors board to the effect that the Nidhi financial position as disclosed and made the representations in the true application form and correct and that Nidhi has compiled with all the rules applicable.

d, a statement to the effect that the Central Government does not undertake any responsibility for the financial Nidhi statements for the correctness of any of the statement or made the representations or expressed opinions by Nidhi;

e, the accepted deposits by Nidhi are not insured and the deposits repayment is not guaranteed either the Central Governmenet or the Reserve bank of India.

f, A verification clause by stating the depositor that he had read and understood the financial and furnished other particulars ad representations made by Nidhi in his application form and after consideration be careful he is making the deposit with Nidhi at his volition and his own risk.

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

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

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