NIDHIS - Proposed Amendments in the Companies Act, 2013

24.1 The Committee did not receive any suggestion for change in the provisions of Section 406 of the Act, under which Nidhis are regulated under the Act. However, the Committee felt that the earlier provisions under the Companies Act, 1956, which required the approval of the Central Government for declaration of a company as ‘Nidhi’, were more appropriate since they provided a centralized and more restrictive framework for regulation of such entities. It was also noted that since the nature of business of Nidhis were similar to those of NBFCs, it was more appropriate to regulate them at a central level in the Ministry, or through one or more Regional Directors.