Rule 10 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 10 controls where a Nidhi may operate. It allows branches only after three profitable years, caps them within the district, requires Regional Director permission for more, confines them to the home State, and since 2022 prescribes a closing procedure with Forms NDH-2 and NDH-5. This article reads rule 10 as amended up to G.S.R. 413(E) dated 16 July 2024; later amendments should be checked. Questions on branch plans can go to our compliance advisory team.
A Nidhi may open branches only if it has earned net profits after tax continuously during the preceding three financial years, up to three branches within the district. More than three, or any branch outside the district, needs prior Regional Director permission in Form NDH-2. No branches outside the State of the registered office. To close a branch it needs Board approval of a payoff plan, Regional Director approval at least sixty days before, a Form NDH-5 newspaper advertisement and an NDH-2 intimation to the Registrar within thirty days of closure.
What counts as a branch
Rule 3(1)(aa), inserted in 2022, says "Branch" means a place other than the registered office of Nidhi. Any other place of operation is therefore a branch for rule 10. Until the 2022 amendment, sub-rules (4) and (5) also named "collection centres or offices or deposit centres, or by whatever name called"; those words were omitted, and the single definition of branch now does the work. See our article on rule 3.
Opening a branch: rule 10(1) to (5)
Rule 10(1): three profitable years. "A Nidhi may open branches, only if it has earned net profits after tax continuously during the preceding three financial years." Net profits after tax must have been earned in each of the three preceding financial years.
Rule 10(2): up to three in the district. "Subject to the provisions contained in sub-rule (1), a Nidhi may open up to three branches within the district."
Rule 10(3): more than three, or outside the district. As amended in 2022, if a Nidhi proposes to open more than three branches within the district or any branch outside the district, it shall obtain the prior permission of the Regional Director "by applying in Form NDH-2 along with fee specified in the Companies (the Registration Offices and Fees) Rules, 2014" and give an intimation to the Registrar about opening of every branch within thirty days of such opening. The fee amount is not stated in the Nidhi Rules.
Rule 10(4): not outside the State. After the 2022 amendment: "No Nidhi shall open branches outside the State where its registered office is situated." There is no route to permission under the text; the Regional Director's power in sub-rule (3) is about the district, not the State.
Rule 10(5): filings up to date. "No Nidhi shall open branches unless financial statement and annual return (up to date) are filed with the Registrar."
| Step | Requirement |
|---|---|
| Eligibility | Net profits after tax in each of the preceding three financial years |
| First three branches | Within the district; no permission needed beyond the other conditions |
| More than three, or any outside the district | Prior Regional Director permission in Form NDH-2 with fee |
| Every branch opened | Intimation to the Registrar within thirty days of opening |
| Location | Within the State of the registered office |
| Filings | Financial statement and annual return up to date |
Closing a branch: rule 10(6) as substituted in 2022
G.S.R. 301(E) of 19 April 2022 substituted rule 10(6). The closure procedure is now the following.
Clause (a): before the Regional Director. A Nidhi shall not close any branch unless:
- (i) the proposal to close the branch, "along with the plan as to how the existing deposits have been or shall be paid off and how the existing loan shall be recovered", is duly approved by the Board at its meeting; and
- (ii) it has obtained the prior approval of the Regional Director by applying in Form NDH-2 with fee "at least sixty days prior to such closure".
The proviso: the Regional Director shall consider the application and pass orders within thirty days of receipt.
Clause (b): after approval. After obtaining approval from the Regional Director, the Nidhi shall:
- (i) publish an advertisement, "as per format NDH-5", in a newspaper in vernacular language in the place where it carries on business at least thirty days prior to the closure, informing the public;
- (ii) fix a copy of the advertisement or a notice informing the closure on the notice board of the Nidhi "as well as the relevant Branch" for at least thirty days from the date the advertisement was published; and
- (iii) give an intimation to the Registrar within thirty days of the closure in Form NDH-2 with fee.
| Order | What happens | Period in the rule |
|---|---|---|
| 1 | Board approves closure proposal and payoff and recovery plan | At a Board meeting |
| 2 | Application to Regional Director in Form NDH-2 with fee | At least sixty days before closure |
| 3 | Regional Director considers and passes orders | Within thirty days of receipt |
| 4 | Newspaper advertisement in format NDH-5, vernacular language | At least thirty days before closure |
| 5 | Notice on the notice board of the Nidhi and the branch | At least thirty days from publication |
| 6 | Intimation to the Registrar in Form NDH-2 | Within thirty days of closure |
Form NDH-5 is the advertisement format inserted in 2022. It is described in our article on Forms NDH-1 to NDH-5.
Rule 10(7): other places to be closed
Inserted in 2022: "Any place, not being a registered office or a branch, where a Nidhi carries on its operation shall be closed within a period of six months from the date of commencement of the Nidhi (Amendment) Rules, 2022 and intimation shall be sent to the Registrar in this regard in Form NDH-2." The commencement date is 19 April 2022; we give the rule's words and do not compute a calendar date.
Read with the definition of Branch in rule 3(1)(aa), this sub-rule is limited by its wording to a place that is neither the registered office nor a branch.
Example
Gomti Nidhi Limited earned net profit after tax in each of its last three financial years and has its registered office in one district of a State. It may open up to three branches in that district, informing the Registrar within thirty days of each opening. To open a fourth, or one in the neighbouring district, it must first obtain Regional Director permission in Form NDH-2. It may not open any branch in another State. Later, it decides to close one branch. The Board approves the closure with a plan for paying off deposits and recovering loans, and the company applies to the Regional Director at least sixty days before the intended closure. After approval it advertises in the NDH-5 format in a vernacular newspaper at least thirty days before closure, posts the notice at the head office and the branch, and files the NDH-2 intimation within thirty days of closure.
Need help with a Nidhi branch plan?
A new branch or a closure touches the Regional Director, the Registrar, the Board and the public notice. Our compliance advisory team can sequence the Board minutes, the Form NDH-2 and the NDH-5 notice so that each period in rule 10 is respected.
Key takeaways
- Branches only after net profits after tax in each of the preceding three financial years.
- Up to three branches within the district; more, or any outside the district, need prior Regional Director permission in Form NDH-2.
- No branches outside the State of the registered office; intimation to the Registrar within thirty days of every opening.
- Closure: Board plan, Regional Director approval at least sixty days before, NDH-5 advertisement at least thirty days before, notice for thirty days, NDH-2 intimation within thirty days of closure.
- Places that are neither the registered office nor a branch were to be closed within six months of 19 April 2022.
Read next
- Rule 5: 200 members, Net Owned Funds and NDH-1
- Rules 13 and 14: deposit periods and unencumbered term deposits
- NDH-1, NDH-2 and NDH-3: Nidhi forms guide
- How to close a Nidhi company in India
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.