Rules 1 and 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 1 gives the Nidhi Rules, 2014 their name and says they came into force on 1 April 2014. Rule 2 says which companies they bind: four classes, from companies declared as Nidhis under the old 1956 law to companies declared under section 406 of the Companies Act, 2013. This article reads both rules as amended up to G.S.R. 413(E) dated 16 July 2024 and then shows which later rule governs which kind of Nidhi.
The Rules were made by G.S.R. 258(E) dated 31 March 2014 and came into force on 1 April 2014. Rule 2 applies them to four classes of company: (a) companies declared as a Nidhi under the 1956 Act, (b) companies functioning on the lines of a Nidhi, (c) companies incorporated as a Nidhi under section 406, and (d) companies declared as a Nidhi under section 406(1). Class (d) was added with effect from 15 August 2019. Which of the later rules (3A, 3B, 5, 23A, 23B) applies to you depends on the class and on the date of incorporation.
Companies that are not sure which class they belong to can start with a compliance advisory review of their incorporation date and activities.
Rule 1: title, enabling power and commencement
The notification is numbered G.S.R. 258(E) and is dated 31 March 2014. It was issued by the Ministry of Corporate Affairs in exercise of the powers under sub-section (1) of section 406, read with sub-sections (1) and (2) of section 469, of the Companies Act, 2013. Section 406 is the section that deals with Nidhis; section 469 is the Central Government's general rule-making power. Our post on section 406 of the Companies Act, 2013 deals with the Act's side of the subject.
Rule 1 has two sub-rules:
- Rule 1(1): the rules may be called the Nidhi Rules, 2014.
- Rule 1(2): they come into force on 1 April 2014.
Rule 1 itself has not been amended. What has changed over the years is the content of the later rules, and every amendment names its own commencement date, which is why the timeline below matters. Where an article in this series says "as amended", it means up to G.S.R. 413(E) dated 16 July 2024. Amendments made after that date should be checked separately.
The amending notifications
Six notifications have amended the Rules since 2014. The table lists them with the dates printed in each text.
| Notification | Date | In force | What it did |
|---|---|---|---|
| G.S.R. 467(E), Nidhi (Amendment) Rules, 2019 | 1 July 2019 | 15 August 2019 | Inserted rule 2(d), rule 3(1)(da), rule 3A, rule 23A and rule 23B; amended rules 4, 5, 7, 12 and 23; added Form NDH-4 |
| G.S.R. 81(E), Nidhi (Amendment) Rules, 2020 | 3 February 2020 | 10 February 2020 | Substituted Forms NDH-1, NDH-2 and NDH-3 (since substituted again) |
| G.S.R. 114(E), Nidhi (Second Amendment) Rules, 2020 | 14 February 2020 | On publication | In rule 23A, "six months" became "nine months" |
| G.S.R. 301(E), Nidhi (Amendment) Rules, 2022 | 19 April 2022 | On publication | Inserted rule 3(1)(aa) and rule 3B; added provisos to rules 3A and 23A; amended rules 4, 5, 6, 8, 9, 10, 12, 14, 15 and 20; substituted rule 18; inserted Form NDH-5 |
| G.S.R. 35(E), Nidhi (Amendment) Rules, 2023 | 20 January 2023 | 23 January 2023 | Substituted Forms NDH-1 to NDH-4 |
| G.S.R. 413(E), Nidhi (Amendment) Rules, 2024 | 16 July 2024 | On publication | Added a proviso to rule 4(5) on the words "Nidhi Limited" |
The rest of the series reads each rule in its present form and says in one line what changed and by which notification.
Rule 2: the four classes of company
Rule 2 is short. The Rules "shall apply to" the following.
(a) Companies declared as a Nidhi or Mutual Benefit Society under the 1956 Act. The text reads: "every company which had been declared as a Nidhi or Mutual Benefit Society under sub-section (1) of Section 620A of the Companies Act, 1956".
(b) Companies functioning on the lines of a Nidhi. Clause (b) covers "every company functioning on the lines of a Nidhi company or Mutual Benefit Society but has either not applied for or has applied for and is awaiting notification to be a Nidhi or Mutual Benefit Society under sub-Section (1) of Section 620A of the Companies Act, 1956". In plain terms, a company that behaves like a Nidhi is bound by the Rules even though it was never declared one.
(c) Companies incorporated as a Nidhi under section 406. "Every company incorporated as a Nidhi pursuant to the provisions of Section 406 of the Act."
(d) Companies declared as a Nidhi under section 406(1). Inserted by the 2019 amendment: "every company declared as Nidhi or Mutual Benefit Society under sub-section (1) of section 406 of the Act".
Rules 2 and 23B refer to the Companies Act, 1956 as printed. Readers should check the current law on what has replaced those references; this article names no replacement.
The classes matter because other rules point back to them. The proviso to rule 7(1) speaks of "sub-rules (a) and (b) of rule 2" (they are clauses, and we quote the words as printed), rule 11(2) refers to "clauses (a) and (b) of rule 2", rule 21 requires "every company covered under rule 2" to file the half-yearly return, and rule 24 punishes "a company falling under rule 2".
Which rule applies to which company
The 2019 and 2022 amendments created different tracks depending on when a Nidhi was incorporated. The table is built only from the words of rules 3A, 3B, 5, 23A and 23B.
| Company | Rule that governs the declaration or status |
|---|---|
| Declared as a Nidhi or Mutual Benefit Society under the 1956 Act (rule 2(a)) | Rule 23B: file Form NDH-4 for updating its status |
| Company functioning on the lines of a Nidhi (rule 2(b)), and every Nidhi incorporated under the Act before 15 August 2019 | Rule 23A, read with rule 3A: get declared as a Nidhi |
| Nidhi incorporated under the Act on or after 15 August 2019 and before 19 April 2022 | Rule 3A (Form NDH-4 deadline) and rule 5 (members, Net Owned Funds, NDH-1) |
| Company incorporated as a Nidhi on or after 19 April 2022 | Rule 3B (application within one hundred twenty days of incorporation); rule 3A and rule 5 do not apply to it |
The dates in the table are those printed in the rules: 15 August 2019 is the commencement of the 2019 amendment, and 19 April 2022 is the commencement of the 2022 amendment. Details follow in our articles on rule 3A, rule 3B and rules 23A and 23B.
An example
Suppose Kaveri Mutual Benefits Limited has been lending to and taking deposits from its members since before 2014, but was never declared a Nidhi. It falls in class (b) of rule 2, so the Rules bind it, including the half-yearly return in rule 21 and the penalty in rule 24. For the declaration, rule 23A is the route. Compare Lotus Thrift Nidhi Limited, incorporated after 19 April 2022: it is in class (c), and rule 3B governs its declaration.
Need help with Nidhi Rules applicability?
If you are unsure which class your company falls in, or which of rules 3A, 3B, 5, 23A and 23B applies to it, our compliance advisory team can map your incorporation date and activities to the correct track before any filing is made.
Key takeaways
- The Rules came into force on 1 April 2014 under G.S.R. 258(E) of 31 March 2014.
- Rule 2 applies to four classes: (a) declared under the 1956 Act, (b) functioning on the lines of a Nidhi, (c) incorporated under section 406, (d) declared under section 406(1).
- Six notifications have amended the Rules; the last held here is G.S.R. 413(E) of 16 July 2024.
- 15 August 2019 and 19 April 2022 are the two dates that decide which declaration rule applies.
- Later amendments should be checked before you rely on any article.
Read next
- Rule 3 of the Nidhi Rules: definitions
- Rule 3B: declaration within 120 days
- Section 406 of the Companies Act, 2013: Nidhi companies
- Nidhi company compliance requirements checklist
Disclaimer: Based on the Nidhi Rules, 2014 as notified (G.S.R. 258(E), 31 March 2014) and as amended by G.S.R. 467(E) of 2019, G.S.R. 81(E) and 114(E) of 2020, G.S.R. 301(E) of 2022, G.S.R. 35(E) of 2023 and G.S.R. 413(E) of 2024, as consulted on 3 October 2026. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.