Rules 13 and 14 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 13 sets how long a Nidhi may take deposits for, caps the interest it may pay and lays down what happens when a depositor asks for money back early. Rule 14 requires the Nidhi to keep at least ten per cent of its deposits in unencumbered term deposits. This article reads both rules as amended up to G.S.R. 413(E) dated 16 July 2024; later amendments should be checked. Questions on how these rules apply to a Nidhi's product design can be taken to a legal consultation.
Fixed deposits run for six to sixty months, recurring deposits for twelve to sixty months. A savings account earns interest only up to one lakh rupees, at not more than two per cent above the nationalised-bank savings rate. A depositor may not be repaid within three months; early repayment after that cuts the rate by two per cent and gives no interest up to six months. Rule 14 requires ten per cent of outstanding deposits in unencumbered term deposits with a scheduled commercial bank or the post office.
Rule 13: deposits
Periods: rule 13(1) to (3)
- (1) Fixed deposits: "accepted for a minimum period of six months and a maximum period of sixty months."
- (2) Recurring deposits: "a minimum period of twelve months and a maximum period of sixty months."
- (3) Recurring deposits relating to mortgage loans: the maximum period "shall correspond to the repayment period of such loans granted by Nidhi."
| Deposit | Minimum | Maximum |
|---|---|---|
| Fixed deposit | Six months | Sixty months |
| Recurring deposit | Twelve months | Sixty months |
| Recurring deposit tied to a mortgage loan | Twelve months | The repayment period of the loan |
The Nidhi's application form must state maturity period, interest and premature rate; see our article on rule 12.
Interest on savings deposits: rule 13(4)
"The maximum balance in a savings deposit account at any given time qualifying for interest shall not exceed one lakh rupees at any point of time and the rate of interest shall not exceed two per cent above the rate of interest payable on savings bank account by nationalised banks."
Two limits: a balance cap of one lakh rupees for interest, and a rate cap of two per cent over the nationalised-bank savings rate. The nationalised-bank savings rate is not stated in the Rules and the Rules point to it only; check the rate currently payable.
Interest on fixed and recurring deposits: rule 13(5)
"A Nidhi may offer interest on fixed and recurring deposits at a rate not exceeding the maximum rate of interest prescribed by the Reserve Bank of India which the Non-Banking Financial Companies can pay on their public deposits." The ceiling comes from a Reserve Bank of India prescription outside the Nidhi Rules and is not stated here; it should be checked at the time of fixing a rate.
Premature repayment: rule 13(6)
A fixed or recurring deposit "shall be foreclosed by the depositor subject to the following conditions":
- (a) a Nidhi shall not repay any deposit within three months from the date of its acceptance;
- (b) where at the request of the depositor a Nidhi repays after three months, the depositor "shall not be entitled to any interest up to six months from the date of deposit"; and
- (c) where at the request of the depositor a Nidhi repays before the period for which the deposit was accepted expires, the rate of interest "shall be reduced by two per cent from the rate which Nidhi would have ordinarily paid, had the deposit been accepted for the period for which such deposit had run".
Death of a depositor. The proviso: "in the event of death of a depositor, the deposit may be repaid prematurely to the surviving depositor or depositors in the case of joint holding with survivor clause, or to the nominee or to legal heir with interest up to the date of repayment at the rate which the company would have ordinarily paid, had such deposit been accepted for the period for which such deposit had run." No two per cent reduction applies on this route.
| Stage | Position under rule 13(6) |
|---|---|
| Within three months of acceptance | No repayment |
| After three months, at the depositor's request | No interest up to six months from the date of deposit |
| Before the agreed period ends, at the depositor's request | Rate reduced by two per cent from the rate for the period the deposit ran |
| Death of depositor | Repayment to survivor, nominee or legal heir at the rate for the period run, without the reduction |
Rule 14: unencumbered term deposits
"Every Nidhi shall invest and continue to keep invested, in unencumbered term deposits with a Scheduled commercial bank (other than a co-operative bank or a regional rural bank), or post office deposits in its own name an amount which shall not be less than ten per cent of the deposits outstanding at the close of business on the last working day of the second preceding month."
Points to read from the words:
- The investment is continuing: "continue to keep invested".
- The place: a scheduled commercial bank other than a co-operative bank or a regional rural bank, or the post office, in the Nidhi's own name.
- The base: deposits outstanding at close of business on the last working day of the second preceding month.
- The amount: not less than ten per cent.
The ten per cent is the same figure that rule 5(1)(c) uses in the first-year test; see our article on rule 5.
The proviso on temporary withdrawal. "In cases of unforeseen commitments, temporary withdrawal may be permitted with the prior approval of the Regional Director" for repayment to depositors, "subject to such conditions and time limit which may be specified by the Regional Director to ensure restoration of the prescribed limit of ten per cent." G.S.R. 301(E) of 2022 added that the approval is sought "by making application in Form NDH-2 alongwith fee specified in the Companies (the Registration Offices and Fees) Rules, 2014". The Regional Director's conditions are not in the Rules and are not covered here.
A worked example of premature repayment
The rates below are assumed for illustration only; the Rules do not fix them. Madan places one lakh rupees in a two-year fixed deposit with Shakti Nidhi Limited at a rate of 8 per cent a year. After nine months he asks for the money back.
- Three months have passed, so repayment is allowed under clause (a).
- Clause (b): no interest up to six months from the date of deposit applies. The deposit has already run nine months, so that bar covers the first six months.
- Clause (c): the deposit is repaid before its two years end, so the rate is reduced by two per cent from the rate the Nidhi would have ordinarily paid had the deposit been accepted for the period it ran. Suppose that rate for a nine-month deposit is 6 per cent; it becomes 4 per cent.
How clauses (b) and (c) fit together for the months after six is a matter for the Nidhi's terms and conditions, which the form must state. The Rules do not do the arithmetic.
Need help with Nidhi deposit terms?
Deposit periods, interest caps, foreclosure terms and the ten per cent term-deposit holding all have to agree with each other and with the application form. Our legal consultation service can review your deposit scheme terms against rules 13 and 14.
Key takeaways
- Fixed deposits: six to sixty months; recurring: twelve to sixty months; recurring tied to a mortgage loan: the loan's repayment period.
- Savings deposit: interest only on up to one lakh rupees, at not more than two per cent above the nationalised-bank savings rate.
- Fixed and recurring deposit rates are capped by the Reserve Bank of India's maximum for NBFC public deposits, which is not stated in the Rules.
- No repayment within three months; after three months at the depositor's request, no interest up to six months and a two per cent reduction if before maturity.
- On death, repayment to survivor, nominee or legal heir without reduction.
- Rule 14: ten per cent of deposits outstanding on the last working day of the second preceding month in unencumbered term deposits, in the Nidhi's own name; temporary withdrawal only with prior Regional Director approval.
Read next
- Rules 9 and 11: Net Owned Funds and the deposit ceiling
- Forms NDH-1 to NDH-5: what each form asks for
- Nidhi company compliance requirements checklist
- Companies (Acceptance of Deposits) Rules, 2014: guide
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.