RBI Updates Nidhi Company Deposit Rules

RBI/2007-08/192 DNBS (PD) CC. No.108 / 03.02.21 / 2007- 08 November 22, 2007 To, Mutual Benefit Financial Companies (Nidhis) and Mutual Benefit Companies (Potential Nidhis) Dear Sirs, Regulation of Mutual Benefit Financial Companies (MBFCs) and Mutual Benefit Companies (MBCs) As you are aware, the Ministry of Company Affairs regulates Mutual Benefit Financial Companies (Notified Nidhis) and Mutual Benefit Companies (Potential Nidhis) comprehensively since 2001. Accordingly reflecting this status the provisions of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 as applicable to a Mutual Benefit Financial Company and a Mutual Benefit Company stands updated. However, if the application of any MBC (Potential Nidhi) for grant of Nidhi status is rejected by the Government of India under the provisions of the Companies Act, 1956, the provisions of the said Directions as applicable to NBFCs would apply to such companies. 2. Paragraph 3(1) of the Notification No.DFC.118 / DG (SPT) – 98 dated January 31, 1998 regarding restrictions on acceptance of public deposits by mutual benefit financial companies has also been deleted. 3. A copy each of the amending  Notification No. DNBS. 197 / CGM (PK) – 2007 dated November 22, 2007  as well as updated  Notification No.DFC.118 / DG (SPT) – 98 dated January 31, 1998  are enclosed for your information and compliance. Yours faithfully, (P. Krishnamurthy) Chief General Manager-in-Charge RESERVE BANK OF INDIA DEPARTMENT OF NON-BANKING SUPERVISION CENTRAL OFFICE CENTRE I, WORLD TRADE CENTRE, CUFFE PARADE, COLABA, MUMBAI 400 005. Notification No. DNBS. 197 / CGM (PK)- 2007 dated November 22, 2007 The Reserve Bank of India, having satisfied that, in the public interest, and to enable the Bank to regulate the financial system of the country to its advantage, it is necessary to amend the Non-Banking Financial Companies Acceptance of Public Deposits ( Reserve Bank) Directions, 1998 , in exercise of the powers conferred by Sections 45J, 45JA, 45K, 45L and 45NC of the Reserve Bank of India Act, 1934 (2 of 1934) and of all the powers enabling it in this behalf, hereby directs that the said directions contained in  Notification No.DFC.118/DG(SPT)-98 dated January 31, 1998  shall stand amended with immediate effect as follows, namely - (i) Sub-paragraph (1) of paragraph 3, shall be deleted. (ii) Sub-paragraph (2) of paragraph 3, shall be substituted by the following paragraph : "The provisions contained in these directions shall not apply to a Mutual Benefit Financial Company or a Mutual Benefit Company; Provided that the application of Mutual Benefit Company is not rejected by Government of India under the provisions of the Companies Act, 1956( Act 1 of 1956)." (P. Krishnamurthy) Chief General Manager-in-Charge

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-08/192 · issued 22 Nov 2007. The plain-English explanation above is BankPulse’s own independent summary.

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