Restrictions on Nidhi Companies


As per Rule 6 of Nidhi rules 2014, a Nidhi Company cannot perform the following activities:

  • Conduct the business of chit fund, leasing finance, and hire purchase. It cannot acquire securities issued by a body corporate.
  • Issue preference shares, debentures, or any debt instrument by any name or in any form whatsoever.
  • Open any current account with its members.
  • Make any acquisitions or arrangements or concessions until the same is adopted in the General Meeting by a special resolution and is approved by the Regional Director.
  • Perform any business other than borrowing/ lending in its own name.
  • Lend to or accept funds from anyone other than its members.
  • Lend to or accept funds from body corporate.
  • Enter into any partnership arrangement in their borrowing or lending operation.
  • Act of publicity for seeking any deposits in any form.
  • Pledge any of its assets lodged by its members as security.
  • Pay any brokerage or incentive for granting loans or deployment of funds or mobilise deposits from its members.


  • If the company adheres to all the provisions of the rules mentioned, it can provide locker facilities to its members provided the income from locker rent does not exceed 20 % of the gross income of the Nidhi at any point of time during the Financial year.
  • Private circulation of the details of fixed deposit schemes among members bearing the words “for private circulation to members only” will not be taken as an advertisement.

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