New Delhi [India], September 24 (ANI): The Ministry of Corporate Affairs (MCA) on Thursday cautioned the public against depositing money in Nidhi Companies promising unusually high returns, after finding that several such companies were not complying with regulatory requirements.
In an advisory, the ministry said that during the examination of applications submitted by Nidhi Companies, it observed that several companies were not fully complying with applicable laws and rules.
It also found that many companies operating as Nidhi Companies had failed to submit the mandatory NDH-4 application within the prescribed time.
Every company seeking to operate as a Nidhi is required to file Form NDH-4 to obtain or update its declaration as a Nidhi from the Central Government.
The ministry warned that some companies were attracting members by promising unusually high returns and advised people to independently verify their regulatory status before depositing money.
"Members of the public are advised not to rely solely on promises of unusually high returns by agents or informal assurances while making financial decisions," the ministry said in its advisory.
The MCA also cautioned that deposits accepted by Nidhi Companies are not insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
"If the company fails or faces fraud, recovery of deposited money can be very difficult or incomplete," the ministry said.
According to the MCA, only 395 companies have been declared as Nidhis by the Central Government to date. The ministry has made the list of these companies available on its website for public verification.
Nidhi Companies are mutual-benefit companies regulated under the Companies Act, 2013, and the Nidhi Rules, 2014. They are permitted to accept deposits and provide loans only to their members. (ANI)
MCA warns public against high-return promises by Nidhi Companies, flags regulatory violations
