Small and medium-sized Nidhi companies are grappling with sharply rising operational costs as regulatory requirements become more stringent. Recent mandates for enhanced auditing, stricter KYC norms, and increased reporting obligations have disproportionately impacted smaller mutual benefit societies with limited administrative resources. Industry estimates suggest compliance costs for these firms have jumped 40-50% over the past two years, squeezing their traditionally thin operating margins.  

The cost surge comes from multiple directions – mandatory professional audits, technology upgrades for digital compliance, and specialized hiring to meet new governance standards. Many small Nidhi operators, particularly in semi-urban and rural areas, lack the scale to absorb these additional expenses. Some are being forced to either merge with larger players or reduce their interest payouts to depositors to offset the rising administrative overheads.  

Industry associations have appealed to regulators for tiered compliance requirements based on company size and deposit base. They argue that while financial discipline is necessary, the current uniform approach risks pushing smaller Nidhi firms out of business, precisely the institutions that serve the most financially excluded communities. The Ministry of Corporate Affairs has acknowledged these concerns and is reportedly considering differential compliance frameworks to preserve the sector’s financial inclusion mission.