Several prominent industry associations and professional bodies have jointly recommended the establishment of a dedicated compliance framework specifically tailored for Nidhi companies. The proposal suggests moving away from the current one-size-fits-all approach under the Companies Act to create regulations that better suit these unique mutual benefit societies. Chartered accountant associations and microfinance institutions argue that specialized norms would help Nidhi companies operate more efficiently while maintaining financial discipline.  

The proposed compliance code seeks to balance regulatory oversight with operational flexibility, recognizing Nidhi companies’ distinct role in grassroots financial inclusion. Key recommendations include simplified reporting structures for smaller Nidhi firms and tiered compliance requirements based on deposit size. The bodies have emphasized that such differentiation would reduce unnecessary regulatory burdens while strengthening essential safeguards for depositors. A separate monitoring mechanism with sector-specific expertise has also been suggested to oversee implementation.  

The move comes amid growing recognition of Nidhi companies’ contribution to financial access in underserved areas. Proponents believe a tailored regulatory approach could enhance the sector’s stability and growth potential. The proposal is currently under review by the Ministry of Corporate Affairs, with stakeholders hopeful that reforms could be introduced in the upcoming fiscal year. Industry experts suggest this could set a precedent for differentiated regulation of other niche financial providers as well.