1. List of rules and compliance to be followed by the company

The following points will discuss the annual compliance, rules and regulation, conditions and checklist which a Nidhi company needs to follow and maintain –

• Conditions as per share capital and allotment of the same
• Requirements to open new branches
• Procedure to close branch
• Condition as per Nidhi rules to accepting deposits
• Checklist of application form of deposit
• Collateral against loan
• Compliance as per un-encumbered deposits
• Conditions to extend loan
• Rules of rate of interest
• Rules of auditor
• Compliance of registrar of companies
• Enforcement of compliance 
• Penalty for non-compliance

2. Share capital and its allotment procedure

• Nidhi can issue shares which are of nominal value, not less than 10 rupees per share.
• Service charge cannot be levied by it for issuing shares.
• Company shall allot to every deposit holder minimum 10 equity shares or shares equivalent to 100 rupees.
• Minimum of one equity share must be held by saving and recurring deposit holder.

3. Opening of branches and conditions for the same

• A Nidhi company can open branches, but the pre-condition is that it must have earned net profit that is after deduction of tax in the last three preceding financial years.
• It can open 3 branches within one district.
• If the company wants to open more than 3 branches within one district or wants to open a branch outside the district, then it must first take necessary permission from the Regional director.
• If the Nidhi company opens more than three branch in one district or opens a branch outside the district it is registered in, then it has to intimate registrar of companies (ROC) within 30 days of opening such branch.
• Nidhi cannot open branches, deposit or collection centers outside or office outside the state where its registered office is situated.
• Nidhi company can open branches and other centers like deposit and collection only if it has filled financial statement and annual returns with the Registrar of companies.

4. Procedure to close branches

• Nidhi company can close a branch only after publishing an advertisement in a local newspaper where it carries on its business 30 days prior to closure.
• Shall fix a notice or the advertisement regarding closure on its notice board 30 days prior to closure.
• The Nidhi company must give intimation to registrar of companies about the closure of branch 30 days before closing it.

5. Condition for accepting deposits

• A Nidhi company can accept deposits up to 20 times its net owned fund. The net owned funds will be calculated as per the last financial year audited return.
• The company shall obtain introduction of the new depositor and keep documentary record of the information it has relied upon for introduction.
• The period of fixed deposit shall be from 6 months to 60 months.
• Recurring deposit period shall be from 12 months to 60 months.
• Nidhi shall give interest of maximum 2 percent above the rate of interest given by nationalized bank on maximum of 1 lakh rupees kept in the saving account of any depositor.
• Nidhi shall not pay a fixed depositor before 3 months of the deposit. Meaning a fixed deposit cannot be broken with Nidhi before 3 months.

6. Checklist of details to be mentioned in the application of accepting deposits

• Name of Nidhi company and its incorporation date
• The details of business carried by company and details of its branches.
• Brief and concise particulars of the management.
• Details of net profit after deduction of tax of three preceding years.
• Maturity date, mode of repayment and interest payable on deposits.
• Interest to be paid in case of premature withdrawal of fixed/recurring deposit.
• A brief summary financial status of company as per last two financial statements.
• Net owned funds of Nidhi company as per last financial year statement.
• The application shall contain the following clause or statement –
• In case of nonpayment of deposit, the depositor may approach the registrar of companies and register its complaint with it.
• In case there is a deficiency in service given to the depositor, the depositor may approach Consumer commission for redressal of its grievance.
• A statement that central government does not undertake any guarantee or assurance as per the soundness of Nidhi company or for any statement issued or representation given by Nidhi.
• The deposit accepted by Nidhi is not insured by Reserve Bank of India or the union government and only Nidhi company shall be liable for any mismanagement of deposits.
• Verification that the depositor has read and understood the terms and conditions of the application and any other representation made by Nidhi company.

7. Collateral which Nidhi can accept while extending loan

• Immovable property, the property documents must be pledged in the name of Nidhi.
• Gold and jewelry
• Deposits such as fixed deposits, government securities, insurance policies and national saving certificate.

8. Compliance as per un-encumbered term deposit

• Nidhi company must invest its deposits into an un-encumbered term deposit with a scheduled commercial bank.
• Nidhi cannot invest it in a regional rural bank, co-operative bank or into a post office deposit.
• The money shall be deposited in its own name and the amount to be inveted will be 10 percent of deposits it has received.
• The money must be deposited till the last working day of the second preceding month.
• Temporary withdrawal can be done if there is any unforeseen situation, but only after prior approval of Regional director.
• The regional director may impose time limit or such other conditions on Nidhi to meet the 10 percent criteria norm.

9. Compliance as to extending of loan by Nidhi

• The loan can only be extended to a member only.
• The amount of loan which a Nidhi can extend to one member depends upon the amount of total deposits a Nidhi company is holding, which are as follows –
• Two lakh rupees if the total amount of deposit is two crores from all its members.
• Seven lakh fifty thousand if total deposit is above two crore and less than twenty crores.
• Twelve lakhs if the total deposit is above twenty crore and less than fifty crores
• Fifteen lakhs if the total deposit by all members is above fifty crores.
• If the Nidhi company has not made profit for last three preceding financial years, the amount of limit mentioned above to extend loan will be cut short by 50 percent in all cases.
• Nidhi company shall not extend loan to a member who has earlier taken loan from Nidhi and has defaulted in repayments.
• The repayment period for loan taken by member shall be one year.
• The securities against which loan is taken by a member shall be pledged with Nidhi company and the maturity date of such securities shall not be more than one year

10. Rules as per rate of interest

• The rate of interest to be charged for extending loan shall not be more than 7.5 percent of the interest given on deposits.
• The method of calculation will be reducing balance method.
• Rate of interest shall not differ in the same type/class of loans. And will not vary according to members. All members will be treated equally.
• The rate of interest must be displayed on the notice board of the registered office and its branches.

11. Rules for auditors

• The term for audit firm or individual auditor shall be five years.
• Nidhi shall not appoint individual auditor or audit firm for a second continuous term.
• Individual auditor or audit firm shall be eligible for re-appointment only after a gap of two years from the end of its last term.
• The auditor of the company shall furnish compliance certificate stating that the company has complied with all the rules and regulation.
• The certificate will be annexed with the audit report.
• If the company has not complied with any rule, that non-compliance must be specifically mentioned.

12. Compliance of requirements of registrar of companies (ROC)

• Nidhi company must file Form no. NDH-3 with the registrar of companies within thirty days of end of half year.
• NDH-3 contains the following information –
• The number of new members admitted.
• The number of members who have quit
• The amount of loan extended by Nidhi company
• Particulars of securities pledged with Nidhi against loans extended by it
• The amount of deposits accepted by it
• Every NDH-3 must be certified by a Chartered accountant, cost accountant or a company secretary.
• Along with NDH-3 form the company must file NDH-1 form also, it must be filed with registrar of companies within 90 days from the end of financial year.
• The NDH-1 form contains following details-
• The number of present members 
• The total amount of deposits
• The particulars of securities taken for extending loan
• The total reserves with Nidhi company.
• NDH-1 form also must be certified by chartered accountant, cost accountant or company secretary.

13. Enforcement of compliance and penalty in case of non-compliance

• The registrar of companies (ROC) has the power to ask the Nidhi company to furnish any information or returns filed by it as it considers necessary, to check any compliant or to investigate financial health of the company, the registrar may take advice from a chartered accountant, company secretary or a cost accountant in any matter while investigating the information or return submitted by the company.
• In case a Nidhi company violates any rules or regulation in term of Memorandum of Association, the regional director may appoint a special officer to investigate that violation and that special officer would report to the regional director.
• Before appointing of regional director, the regional director will have to give an opportunity to the Nidhi company to explain itself and be heard and only if the explanation is not satisfactory, the regional director may appoint a special officer to investigate.

14. Penalty in case of non-compliance

If a company violates any rule or regulation prescribed in the Nidhi rules, 2014, the company and its officer will be liable to pay a fine of 5 thousand rupees, and 500 rupees fine everyday if the company is continuing contravention of rules even after initial fine has been imposed.