The government has announced a new limit on the number of branches that Nidhi companies can open, aiming to bring more structure and regulatory clarity to their expansion strategies. Under the revised rules, Nidhi companies that meet the necessary financial and compliance criteria are now allowed to open a maximum of three branches within the district where their registered office is located during the first three financial years. Beyond this, additional branches in other districts or states can only be established with prior approval from the Regional Director of the Ministry of Corporate Affairs. This move is intended to ensure that growth is measured and within a framework that allows for effective regulatory supervision.

The decision to impose a branch limit comes as part of a broader effort to monitor the rapid proliferation of Nidhi companies and their outreach into multiple territories without adequate governance infrastructure. Authorities observed that while expansion helps increase access to credit in underserved areas, it also carries the risk of oversight lapses and financial mismanagement if not properly regulated. By capping the number of branches initially, the government aims to encourage Nidhi companies to focus on building a solid operational foundation, including financial health, member compliance, and record transparency, before pursuing wider geographic expansion.

This regulatory step is expected to benefit both the companies and their members by promoting responsible growth. It also encourages Nidhi companies to concentrate on strengthening local engagement and services rather than overextending their reach. Companies that demonstrate consistent compliance and financial prudence will still have the opportunity to scale further, but under a well-monitored and permission-based system. This approach balances the goal of expanding financial inclusion with the need to maintain discipline and order in the non-banking financial sector.