The Indian government is actively considering a consolidation strategy for the Nidhi company sector, with plans to merge financially unstable or non-compliant entities with stronger counterparts. This initiative follows increasing regulatory concerns about mismanagement, liquidity issues, and fraudulent activities in some Nidhi companies that jeopardize member deposits. The Ministry of Corporate Affairs is developing a structured framework to facilitate these mergers while ensuring robust safeguards for depositor interests and maintaining sectoral stability.  

Under the proposed plan, financially sound Nidhi companies would be encouraged to absorb weaker players through a regulated merger process. This approach aims to reduce the number of dormant or non-performing entities while strengthening the overall sector. The government is expected to introduce simplified compliance procedures and potential incentives to promote voluntary mergers, alongside stricter enforcement measures for companies that fail to meet regulatory standards. The consolidation effort seeks to enhance operational efficiency, improve governance standards, and prevent systemic risks in this important savings and lending segment.  

This policy move forms part of broader financial sector reforms to protect small depositors and maintain confidence in community-based financial institutions. Authorities are currently engaging with industry stakeholders to finalize the merger guidelines, which will likely include provisions for member protection, asset valuation protocols, and transition mechanisms. The initiative reflects the government’s balanced approach, supporting the Nidhi sector’s growth while implementing necessary corrective measures to address existing vulnerabilities in the system.