What changed
RBI deleted paragraph 3(1) of the 1998 deposit directions, which previously restricted public deposit acceptance by mutual benefit financial companies. It also replaced paragraph 3(2) to exempt all notified Nidhis and Potential Nidhis from these directions, unless a Potential Nidhi's application is rejected by the government.
What it means for you
Nidhi companies that are notified or have pending applications are now free from RBI's public deposit restrictions, as long as their Nidhi status is valid. If a Potential Nidhi's application is rejected, it must immediately comply with NBFC deposit norms, which could affect their funding and operations.
What you must do
- Verify your Nidhi status with the Ministry of Company Affairs to ensure continued exemption.
- If your Potential Nidhi application is rejected, transition to NBFC deposit compliance immediately.
- Update internal policies and reporting to reflect the amended 1998 directions.
- Monitor any future rejections from the government to avoid regulatory breaches.
Who it affects
Notified Nidhi companies, Potential Nidhi companies (Mutual Benefit Companies), NBFCs that may have Nidhi subsidiaries
What happens if my Potential Nidhi application is rejected?
If the government rejects your application under the Companies Act, 1956, your company must follow the NBFC deposit directions, including restrictions on public deposits.
Does this circular apply to all Nidhis?
Yes, it applies to both notified Mutual Benefit Financial Companies (Nidhis) and Mutual Benefit Companies (Potential Nidhis), but only as long as their Nidhi status is not rejected.