Friday, 23 February 2018

Acceptance of Deposits by Nidhi Company under Rule 11 & 13

Acceptance of deposit is the only reason for which Nidhi Company is created. Acceptance of deposit is governed by Rule 11 and Rule 13 of the Nidhi Rules 2014. Further, these rules should be properly followed to avoid legal issue.



Rule 11:
A Nidhi company shall not accept deposits exceeding 20 times of its Net Owned funds as per the last audited financial statement. Net owned funds include the total capital invested in the business. Let us understand with the help of the table below:

Net Owned Funds
Maximum limit on acceptance of deposits
1 crore
20 crore
10 crore
200 crore
20 crore
400 crore
50 crore
1000 crore

Rule 13:

1)   The fixed deposits shall be accepted for a minimum period of six months and maximum period of sixty months
2)   Recurring deposits shall be accepted for a minimum period of twelve months and a maximum period of sixty months
3)   If the recurring deposit is connected to the mortgage loans, the maximum period for holding the recurring deposit shall be related to repayment period of such loans granted by Nidhi.
4)   The maximum balance in savings deposit account at any point of time which qualifies for interest shall not exceed one lakh rupees at any point of time and the rate of interest in such a case will not exceed 2% above the interest payable on saving bank account by nationalized banks.
5)   After Registration of Nidhi Company shall not offer interest on fixed deposit and recurring deposit at the rate not exceeding the maximum rate of interest as prescribed by the Reserve Bank of India.
6)   A fixed deposit or a recurring deposit account shall be foreclosed by the depositor subject to following conditions:
  • Nidhi shall not refund any deposit within a period of 3 months from the date of its acceptance;
  • If the Nidhi repays any deposit after 3 months, the depositor shall not be permitted to any interest up to 6 months from the date of deposit
  • At the depositor’s discretion, a Nidhi company makes repayment of a deposit before the expiry of the period for which such deposit was accepted by Nidhi, the interest rate payable by Nidhi on such deposit will be reduced by 2%. from the rate which Nidhi would have normally paid, had the deposit been accepted for the period for which such deposit had run:
  • Provided that in case of event of death of a depositor, the deposit may be repaid prematurely to the persisting depositor or depositors or to the nominee or to legal heir with interest up to the date of repayment at the rate which the company would have ordinarily paid, had such deposit been accepted for the period for which such deposit had run.

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