1. Member-Centric Operations

• Nidhi Companies operate solely for the benefit of their members.
  
• Both depositors and borrowers must be registered members of the company.
  
• No transactions are allowed with non-members.
  
• Membership is granted through the purchase of equity shares.
  
• A minimum of 200 members is required within one year of incorporation.
  

2. Regulated by the Ministry of Corporate Affairs

• Nidhi Companies are governed by the Companies Act, 2013, and Nidhi Rules, 2014.
  
• The Ministry of Corporate Affairs is the main regulatory authority.
  
• They are exempt from core Reserve Bank of India regulations applicable to NBFCs.
  
• Registration as a Public Company is mandatory.
  
• The term “Nidhi Limited” must be part of the company name.
  

3. Acceptance and Lending of Deposits

• Nidhi Companies accept deposits only from their members.
  
• Permitted deposit types include savings, fixed deposits, and recurring deposits.
  
• Loans are granted to members against security such as gold, FD receipts, or property.
  
• Interest rates and terms must conform to limits set by the Nidhi Rules.
  
• The company must maintain unencumbered term deposits of 10% of total deposits.
  

4. Financial and Operational Restrictions

• The company cannot engage in business like chit funds, hire-purchase, or leasing.
  
• It cannot advertise or solicit deposits from the general public.
  
• Deposit acceptance is limited to 20 times the Net Owned Funds.
  
• Preference shares, debentures, and other unsecured instruments are prohibited.
  
• Business operations must align strictly with the stated objective clause.
  

5. Simpler Compliance and Structure

• Compared to other financial entities, compliance requirements are simpler.
  
• Internal control and audit systems must be maintained.
  
• Annual filings include forms like NDH-1, NDH-3, AOC-4, and MGT-7.
  
• Board meetings and member records must be properly maintained.
  

The company enjoys limited liability and a separate legal status.