No. 5/7/2000-CL-V

Government of India

Ministry of Law, Justice and Company Affairs

Department of Company Affairs

Shastri Bhawan, 5th Floor, "A" Wing,

Dr. R. P. Road, New Delhi-110 001

Dated: 29 March, 2000

PRESS NOTE: 4/2000

COMMITTEE APPOINTED TO STREAMLINE NIDHI COMPANIES

 

As on date there are 192 Nidhi companies. 136 companies are in the State of Tamil Nadu, 17 in U.P., 14 in Andhra Pradesh, 10 in Karnataka etc.

2. Recently it has come to the notice of the Government that some of the Nidhi companies are facing liquidity crunch. Instances of default in repayment of deposits have also come to light.

 

3. As per the existing law, Nidhi companies are not allowed to raise deposits beyond Rs.20 crore and companies, which have deposits beyond this amount on the date of Notification cannot accept further deposits. If the deposits exceed the limit as on 1st November 1999 the company would cease to be a Nidhi company. Further a Nidhi company cannot have more than three branches in a State where it is registered.

 

4. Last year Government in exercise of the powers conferred by sub-section (1( of section 637A of the Companies Act, 1956 had issued a series of guidelines for the healthy and orderly growth of the Nidhi companies throughout the country.

 

5. Government has set up a Committee of experts under the chairmanship of Shri P. Sabanayagam, a distinguished civil servant and former Secretary, Education, Government of India; and later Chief Secretary, Govt. of Tamil Nadu, to examine in depth various aspects of the functioning of the Nidhis, its operational dynamics and suggest appropriate frame work so that a healthy climate is evolved for the growth of the Nidhi companies on proper corporate lines having good health, viability and necessary resilience. An expert from RBI has also been associated as a Member of the Committee. The other Members of the Committee are as under:-

 

    1. Dr. S. Radhakrishnan, Prof. Of Economics, Chennai.

    2. Shri N. R. Sridharan, CA, Chennai.

    3. Shri TSV Panduranga Sarma, CA, New Delhi.

    4. Shri VSN Murthy, Chief General Manager, Deptt. of Supervision, NBOD, Mumbai.

    5. Shri H. Raja, CA, Karaikudy.

    6. Shri Mathuradas Mehta, Mumbai.

    7. Shri.V.S. Rao, Regional Director (SR), Chennai

    8. Shri R. Vasudevan, Director, Deptt of Company Affairs

 

6. Shri V.S. Rao an officer of Indian Company Law Service at present Regional Director (SR), Chennai will be the Member Secretary.

 

7. The Committee will be submitting its report within three months. An important term of reference is to examine the feasibility of bringing in deposits, insurance cover and to put in place a system of rating as it exists in banking deposits and Non-Banking Financial Companies, respectively.

 

 

( A. RAMASWAMY )

Joint Secretary to the Government of India