New norms allow nidhi cos. to raise deposits

By J. Venkatesan

NEW DELHI, AUG. 1. The Department of Company Affairs (DCA) has issued a notification permitting nidhi or mutual benefit societies to accept deposits from the public not exceeding 20 times of its net owned funds (NOFs).

This notification incorporates the new guidelines framed by the DCA in accordance with the recommendations of the Sabanayagam Committee's report. It supercedes all other notifications issued earlier and tightens the law relating to nidhis. (Out of 196 nidhis, 136 are in Tamil Nadu).

The notification makes it clear that no nidhi company should issue any advertisement in any form for soliciting deposit or offer any incentive for making the deposits.

In the case of existing nidhis having deposits in excess of the aforesaid limits, the same should be brought to the prescribed limit by increasing the NOF or alternatively by reducing the deposit within two years.

The other salient features of the notification are: within the prescribed limits, a nidhi or mutual benefit society can open fixed/recurring deposit accounts for a minimum period of 12 months and a maximum period of 60 months. For savings bank account, the maximum balance at any given time qualifying for interest should not exceed Rs. 20,000 and the rate of interest should not be more than 2 per cent above the rate of interest payable on savings bank by nationalised banks.

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Section  : Business
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