Rules 9 and 11 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 9 fixes the minimum Net Owned Funds a Nidhi must maintain, now twenty lakh rupees. Rule 11 caps the deposits a Nidhi may accept at twenty times its Net Owned Funds, read from its last audited financial statements. This article reads both rules as amended up to G.S.R. 413(E) dated 16 July 2024; later amendments should be checked.
A Nidhi must maintain Net Owned Funds of not less than twenty lakh rupees (or a higher amount the Central Government specifies), excluding preference share proceeds; existing Nidhis had eighteen months from 19 April 2022. It may not accept deposits exceeding twenty times its Net Owned Funds as per its last audited financial statements. Rule 11 also has a transition table for older companies, whose dates have passed.
Rule 9: minimum Net Owned Funds
Rule 9 as it stands: "Every Nidhi shall maintain Net Owned Funds (excluding the proceeds of any preference share capital) of not less than twenty lakh rupees or such higher amount as the Central Government may specify from time to time."
G.S.R. 301(E), dated 19 April 2022, substituted "twenty lakh" for the earlier lower figure and added a proviso: "every Nidhi existing as on the date of commencement of the Nidhi (Amendment) Rules, 2022 shall comply with this requirement within a period of eighteen months from the date of such commencement". The commencement date is 19 April 2022. We give the rule's words and that date and do not compute an end date.
Points to keep in mind:
- It is a continuing duty. The verb is "maintain", so the minimum applies at all times, not only on the day of an application.
- Preference share proceeds are excluded. Rule 3(1)(d) says the same in its proviso. See our article on rule 3 for the definition: paid up equity share capital and distributable reserves (the term defined in section 2(43) of the Act), less accumulated losses and intangible assets in the last audited balance sheet.
- A higher amount may be specified. The Central Government may specify a higher amount from time to time. No higher amount is stated in the Rules, so nothing is stated here; check for any such specification.
- Related figures. Rule 3B(1)(II) uses twenty lakh rupees for a new Nidhi's application, while rule 5(1)(b), which does not apply to companies incorporated from 19 April 2022, still prints ten lakh rupees. See our articles on rule 3B and rule 5.
Because Net Owned Funds is read from audited accounts, the quality of the books matters; our books of accounts compliance support is relevant to keeping that figure supportable.
Rule 11: the deposit ceiling
Rule 11(1)
"A Nidhi shall not accept deposits exceeding twenty times of its Net Owned Funds (NOF) as per its last audited financial statements."
Three words carry the weight: "accept" (the limit bites at the moment of accepting a deposit), "twenty times" (the ratio 1:20, the same as in rule 5(1)(d)) and "last audited financial statements" (the base is the most recent audited figure, not a figure computed during the year).
Rule 11(2): the transition table
For companies under clauses (a) and (b) of rule 2 and existing on or before 26 July 2001 which had accepted deposits in excess of the limit, the excess had to be removed "by increasing the Net Owned Funds position or alternatively by reducing the deposit according to the table".
| Ratio of Net Owned Funds to Deposits (as on 31.3.2013) | Date by which the company has to achieve 1:20 |
|---|---|
| More than 1:20 but up to 1:35 | 31 March 2015 |
| More than 1:35 but up to 1:45 | 31 March 2016 |
| More than 1:45 | 31 March 2017 |
These dates have passed. We state the table as printed and draw no conclusion about any company.
Rule 11(3): no deposits that breach the ratio
The companies covered by the table "shall not accept fresh deposits or renew existing deposits if such acceptance or renewal leads to violation of the prescribed ratio." Renewal counts as acceptance for this purpose.
Rule 11(4): incremental deposits
"The ratio specified in sub-rule (2) above shall also apply to incremental deposits." Fresh deposits taken during the transition therefore had to respect the ratio rather than widen the gap.
Worked example
Suppose Hari Nidhi Limited's last audited balance sheet shows paid up equity share capital of thirty lakh rupees, distributable reserves of five lakh rupees, accumulated losses of two lakh rupees and intangible assets of one lakh rupees. Net Owned Funds is 30 + 5 - 2 - 1 = thirty-two lakh rupees, which is above twenty lakh. Twenty times thirty-two lakh is six crore forty lakh rupees. If deposits stand at six crore, Hari Nidhi may accept up to forty lakh rupees more on the last audited figures. Suppose the company also has preference share proceeds of ten lakh rupees: they stay out of the calculation. The ratio of Net Owned Funds to deposits at six crore is 32 lakh to 600 lakh, within 1:20.
If a later audit shows lower Net Owned Funds, the ceiling falls with it; the rule bases the limit on the last audited statements, so the next audit resets the figure.
How the two rules fit together
- Rule 9 is a floor for Net Owned Funds.
- Rule 11(1) is a ceiling on deposits, set by Net Owned Funds.
- Rule 5(1)(d) ties the 1:20 ratio to the first-year test for older Nidhis.
- Rule 14 requires ten per cent of deposits to be kept in unencumbered term deposits; see our article on rules 13 and 14.
The Act's treatment of deposits is outside the Nidhi Rules; see our post on section 73 of the Companies Act, 2013.
Need help with Net Owned Funds workings?
Net Owned Funds and the deposit ceiling come from audited figures, and a miscalculation can lead to deposits accepted beyond the limit. Our books of accounts compliance team can prepare the workings from the audited balance sheet.
Key takeaways
- Rule 9 as amended: Net Owned Funds of not less than twenty lakh rupees, excluding preference share proceeds, or a higher amount the Central Government specifies.
- Existing Nidhis had eighteen months from 19 April 2022 to comply.
- Rule 11(1): deposits cannot exceed twenty times Net Owned Funds as per the last audited financial statements.
- The rule 11(2) table (31 March 2015, 2016 and 2017) is a transition for companies existing on or before 26 July 2001; the dates have passed.
- Fresh and renewed deposits must not breach the ratio; the ratio applies to incremental deposits.
Read next
- Rule 3: definitions of Net Owned Funds and asset classes
- Rule 5: 200 members, Net Owned Funds and NDH-1
- Nidhi company compliance requirements checklist
- Section 73 of the Companies Act, 2013: deposits
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.