The Ministry of Corporate Affairs (MCA) has issued an urgent public advisory cautioning investors against putting their funds into non-compliant Nidhi companies that entice members with promises of unusually high returns.
During the evaluation of Form NDH-4 filings, the MCA detected widespread non-compliance with the Companies Act, 2013, and Nidhi Rules, 2014. A significant number of entities functioning as Nidhi companies have failed to submit their mandatory NDH-4 declaration forms within prescribed timelines.
Under rules updated in 2019, any entity seeking to operate as a mutual-benefit Nidhi firm must file Form NDH-4 to receive formal declaration from the Central Government. As of date, only 395 companies hold valid Nidhi status on the official MCA portal.
The Ministry strongly advised citizens to perform due diligence instead of relying on informal assurances or promises of high yields. Crucially, the MCA highlighted that deposits in Nidhi companies are not insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
In cases of fraud or corporate insolvency, depositors face severe difficulties in recovering their capital.
Nidhi companies are mutual-benefit structures created strictly to cultivate thrift among members by accepting deposits and offering loans exclusively to their member base. Investors are urged to check the official active list on the MCA website before depositing money.
