New Delhi: The Ministry of Corporate Affairs (MCA) has issued an advisory cautioning the public against making investment decisions in Nidhi companies without conducting proper background checks, particularly where unusually high returns are promised.
Follow The PSUWatch Channel on WhatsApp
The advisory follows MCA’s examination of applications filed in Form NDH-4, during which it found that several Nidhi companies were not fully complying with the applicable provisions of the Companies Act and rules. The ministry also noted that some companies functioning as Nidhi companies had not submitted their NDH-4 applications within the stipulated timeframe.
Companies intending to function as Nidhis are required to file an application in Form NDH-4 for being declared or updated as a Nidhi.
MCA said it has come to its notice that some companies lure members by promising unusually high returns. It has advised members of the public not to rely solely on such promises or informal assurances while making financial decisions.
The ministry has asked prospective investors to independently verify whether the company has been declared as a Nidhi by the Central Government and to carefully consider the terms before making any financial commitment.
Follow PSU Watch on LinkedIN
MCA has also highlighted that deposits accepted by Nidhi companies are not insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). In the event of company failure or fraud, recovery of deposited money could therefore be difficult or incomplete.
Nidhi companies are mutual-benefit companies regulated by MCA under the Companies Act, 2013 and Nidhi Rules, 2014. Such companies can accept deposits and provide loans only to their members.
The regulatory framework for Nidhis was changed through amendments to Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014, effective August 15, 2019. The amendments reintroduced the requirement for a company to be declared as a Nidhi by the Central Government.
According to MCA, a list of 395 companies declared as Nidhis under the Companies Act, 1956/2013 is available on the ministry’s website for public information. The ministry said the list of active Nidhi companies published on its portal on November 3, 2025, can be accessed by the public for verification before making financial decisions.
(PSU Watch is India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy. 👉 Click to join our channel now: PSUWatch WhatsApp Channel. Prefer LinkedIn? Follow PSU Watch on LinkedIN. Click to stay connected on Twitter here and stay updated)