Rules 15 and 16 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 15 allows a Nidhi to lend only to its members, sets a ceiling per member that rises with the Nidhi's deposits, and restricts the security it may take. Rule 16 caps the interest rate on loans. This article reads both rules as amended up to G.S.R. 413(E) dated 16 July 2024; later amendments should be checked. The practical side of lending is covered in our post on Nidhi company loan rules, and questions on a particular loan book can go to a legal consultation.
A Nidhi lends only to its members. The limit per member is two lakh, seven lakh fifty thousand, twelve lakh or fifteen lakh rupees, depending on the Nidhi's total deposits from members, read from the last audited statements. A Nidhi without profit in three years may lend only fifty per cent of those limits. Security is limited to gold, silver and jewellery, immovable property or deposits and similar instruments. The interest rate is at most seven and half per cent above the highest deposit rate, on reducing balance.
Rule 15(1): only members
"A Nidhi shall provide loans only to its members." Rule 6(f) says the same from the other side: no deposits from or loans to anyone but members. The 2022 proviso adds: "in case of joint shareholders, the loan shall be provided to the member whose name appears first in the Register of members." Where shares are held jointly, the first-named holder is the borrower.
Rule 15(2): the four limits
The loans given to a member "shall be subject to the following limits":
| Clause | Total deposits of the Nidhi from its members | Limit on loan to a member |
|---|---|---|
| (a) | Less than two crore rupees | Two lakh rupees |
| (b) | More than two crore rupees but less than twenty crore rupees | Seven lakh fifty thousand rupees |
| (c) | More than twenty crore rupees but less than fifty crore rupees | Twelve lakh rupees |
| (d) | More than fifty crore rupees | Fifteen lakh rupees |
Slab boundaries. The slabs say "less than", "more than ... but less than" and "more than". A Nidhi with deposits of exactly two crore, exactly twenty crore or exactly fifty crore falls in no slab as printed. We state the gap and do not resolve it.
First proviso: fifty per cent where profits are missing. "Where a Nidhi has not made profits continuously in the three preceding financial years, it shall not make any fresh loans exceeding fifty per cent of the maximum amounts of loans specified in clauses (a), (b), (c) or (d)."
Second proviso: defaulters. "A member shall not be eligible for any further loan if he has borrowed any earlier loan from the Nidhi and has defaulted in repayment of such loan."
Rule 15(3). For sub-rule (2), "the amount of deposits shall be calculated on the basis of the last audited annual financial statements." The same audited basis is used in rule 11 for the deposit ceiling; see our article on rules 9 and 11.
Rule 15(4): permitted securities
A Nidhi "shall give loans to its members only against the following securities":
| Clause | Security | Conditions as printed |
|---|---|---|
| (a) | Gold, silver and jewellery | Repayment period not more than one year |
| (b) | Immovable property | Total loans against immovable property (excluding mortgage loans on registered mortgage under section 69 of the Transfer of Property Act, 1882) not above fifty per cent of the overall loan outstanding on the date of Board approval; individual loan not above fifty per cent of the value of the property; repayment period not above seven years |
| (c) | Fixed deposit receipts, National Savings Certificates, other Government Securities and insurance policies | Securities duly discharged and pledged with the Nidhi; maturity date not beyond the loan period or one year, whichever is earlier; for loans against fixed deposits, loan period not beyond the unexpired period of the deposit |
In clause (b), the fifty per cent limits work on different bases. One is a portfolio cap: loans against immovable property (excluding the registered-mortgage category) must not exceed fifty per cent of the overall loan outstanding on the date of Board approval. The other is a per-loan cap: no individual loan above fifty per cent of the value of the property. The seven-year repayment limit is a third, separate condition.
Clause (a) already prints "gold, silver and jewellery". The 2022 amendment inserted "silver" in rule 12(1) and rule 20(6), not in rule 15(4); see our articles on rule 12 and rule 20.
Rule 16: the interest cap
"The rate of interest to be charged on any loan given by a Nidhi shall not exceed seven and half per cent above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing balance method."
The proviso: "Nidhi shall charge the same rate of interest on the borrowers in respect of the same class of loans and the rates of interest of all classes of loans shall be prominently displayed on the notice board at the registered office and each branch office of Nidhi."
Four requirements follow:
- The cap is seven and half per cent above the highest deposit rate the Nidhi offers.
- Interest is on the reducing balance method.
- The same rate applies to borrowers in the same class of loans.
- The rates of all loan classes are displayed on the notice board at the registered office and every branch office.
Worked example
Say Mohan Nidhi Limited has total deposits from members of ten crore rupees on its last audited statements. That falls in clause (b): the limit per member is seven lakh fifty thousand rupees. Suppose it has not made profits continuously in the three preceding financial years: fresh loans cannot exceed fifty per cent of that maximum, which is three lakh seventy-five thousand rupees. A member who defaulted on an earlier loan cannot get another.
Now take rate. If the highest deposit rate the Nidhi offers is 8 per cent (assumed for illustration), the maximum loan rate is 8 + 7.5 = 15.5 per cent, applied on the reducing balance, and the same rate for all borrowers in the same class of loans.
Need help with Nidhi lending policy?
Loan limits, security rules, and the rate cap interact with each other and with prudential norms, so a lending policy needs to be written against all of them. Our legal consultation service can review a Nidhi's loan policy, sanction format and rate card against rules 15 and 16.
Key takeaways
- Loans only to members; for joint shareholders, to the member named first in the Register of members.
- Limits by deposits from members: two lakh, seven lakh fifty thousand, twelve lakh and fifteen lakh rupees; exact boundary amounts fall in no slab as printed.
- A Nidhi with no continuous profits in the three preceding years can make fresh loans only up to fifty per cent of the limits.
- No further loan to a defaulter.
- Security: gold, silver and jewellery (one year); immovable property (fifty per cent limits, seven years); deposits, National Savings Certificates, Government Securities and insurance policies.
- Interest not above seven and half per cent over the highest deposit rate, reducing balance, same rate for the same class, displayed.
Read next
- Rule 20: prudential norms and gold and silver loans
- Rule 6: general restrictions on a Nidhi
- Nidhi company loan rules: limits, security and interest
- Nidhi company vs NBFC: key differences
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.