The Ministry of Corporate Affairs (MCA) has issued an advisory on Nidhi Companies, cautioning the public to verify a company’s regulatory status before making financial decisions, particularly when unusually high returns are promised.
The advisory follows MCA’s examination of applications filed in Form NDH 4, where the ministry found that several companies operating as Nidhis were not fully complying with the applicable provisions of the Companies Act and Nidhi Rules. MCA also noted that some companies had not submitted their NDH 4 applications within the prescribed time.
NDH 4 filing required for Nidhi status
A company seeking to operate as a Nidhi is required to submit an application in Form NDH 4 to be declared or updated as a Nidhi.
MCA said members of the public should independently check whether a company has been declared as a Nidhi by the Central Government. The ministry specifically cautioned against relying only on promises of unusually high returns made by agents or on informal assurances.
Nidhi Companies are mutual benefit companies regulated by MCA under the Companies Act, 2013 and Nidhi Rules, 2014. They are permitted to accept deposits and provide loans only to their members.
Deposits are not covered by DICGC insurance
MCA has highlighted an important risk for depositors: deposits accepted by Nidhi Companies are not insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The ministry said that if a company fails or becomes involved in fraud, recovery of deposited money could be difficult or incomplete.
The regulatory framework was changed on 15 August 2019. Amendments to Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014 brought back the requirement for Central Government declaration of a company as a Nidhi, similar to the earlier framework under Section 620A of the Companies Act, 1956.
MCA said 395 companies have been declared as Nidhis by the Central Government under the relevant provisions of the Companies Act, 1956 and 2013. The ministry has published a list of active Nidhi Companies on its portal, with the referenced list published on 3 November 2025.
Q1. What has MCA said about Nidhi Companies?
MCA has advised the public to verify the regulatory status of Nidhi Companies and not rely solely on unusually high return promises.
Q2. What is Form NDH 4?
Form NDH 4 is the application that a company seeking to function as a Nidhi must file to be declared or updated as a Nidhi.
Q3. Are Nidhi Company deposits insured by DICGC?
No. MCA states that deposits accepted by Nidhi Companies are not insured by the Deposit Insurance and Credit Guarantee Corporation.
Q4. How many companies have been declared as Nidhis?
MCA said 395 companies have been declared as Nidhis by the Central Government under the relevant provisions of the Companies Act, 1956 and 2013.
Q5. When was the requirement for Central Government declaration reintroduced?
The requirement was reintroduced through amendments to Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014, effective from 15 August 2019.
