1. Maximum Interest Rate Permitted

• Nidhi Companies are not free to charge any rate of interest on loans.
  
• As per Rule 7 of the Nidhi Rules, 2014, the maximum interest rate must not exceed 7.5% above the highest rate offered on deposits.
  
• This cap applies uniformly to all loans given to members.
  
• The interest rate must be decided by the Board of Directors within the prescribed limit.
  
• Any excess charge beyond this ceiling is considered non-compliant.
  

2. Basis for Calculating Interest Rate Cap

• The company must first determine the highest interest rate it offers on member deposits.
  
• This deposit rate serves as the benchmark for calculating the loan interest cap.
  
• For example, if the highest deposit interest is 10%, the maximum loan interest allowed is 17.5%.
  
• The rate must be transparently fixed and consistently applied.
  
• Fluctuations in deposit rates may require periodic review of loan rates.
  

3. Uniform Application to Members

• The prescribed interest rate limit applies to all member loans without exception.
  
• No different or higher rates can be charged to selected members or for specific loans.
  
• Interest terms must be mentioned in the loan agreement.
  
• Any change in interest rate policy must be approved by the board and communicated to members.
  
• The policy ensures fairness and uniformity in financial dealings.
  

4. Impact on Revenue and Lending Policy

• The interest rate ceiling limits the income margin for Nidhi Companies.
  
• It promotes affordable credit for members while ensuring operational sustainability.
  
• Companies must align their lending operations to remain profitable within the allowed rate.
  
• Cost efficiency and risk management are essential to balance low interest margins.
  
• Proper financial planning helps maintain compliance and financial health.
  

5. Compliance and Disclosure Requirements

• Interest rates on loans must be properly recorded in the statutory registers.
  
• Loan documents must reflect the approved rate and repayment schedule.
  
• Any deviation from the allowed rate may lead to penalties or cancellation of the Nidhi status.
  
• During audits or inspections, interest records are subject to verification.
  
• Compliance with interest restrictions is mandatory to maintain legal recognition.