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Nidhi Company Registration

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Nidhi Company Registration
Definition

About Nidhi Company

A "Nidhi company" is a company that manages "deposits from and loans to" its members (shareholders) only, and works for their mutual benefits. Accordingly, certain exemptions have been provided to a Nidhi Company, in respect of annual compliances and tax assessment.

Nidhi Companies in India are formed, administered, and controlled by Section 406 of the Companies Act, 2013, the Companies (Nidhi Companies) Rules of 2014, and Chapter XXVI of the Companies Rules, 2014.

The name "Nidhi" signifies "treasure" and it has its roots in the Hindi vocabulary. A Nidhi Company is a specific class of NBFC — though not directly regulated by the RBI, the RBI still has powers to issue directives for them related to their deposit acceptance activities.

Overview

Nidhi Company Registration

Section 406 of the Companies Act, 2013 and the Companies (Nidhi Companies) Rules of 2014 provide all the arrangements concerning the joining and administration of a Nidhi Company in India. The rules and directives for Nidhi Companies are likewise given by the RBI — chiefly related to financial activities and investments.

The interest charged on loans under a Nidhi Company is very sensible. The advances are given against security only. The deposits under Nidhi do not earn much interest as compared to deposits in the sorted out banking sector.

All lending and borrowing of the Nidhi Companies are done by its members, exclusively. Consequently, such organizations also allude to as Mutual Benefit Societies. If you are hoping to begin a business in financing or advances in India, a Nidhi Company is the best choice.

Documents

Documents Required

For Directors & Shareholders
  • Passport-sized photographs of all directors
  • ID proof (PAN card and Passport valid)
  • Address proof (Ration Card, Aadhaar, Passport, Voter ID, Utility Bill)
  • DIN for all directors
For Registered Office
  • Address Proof of the Company (not older than 2 months)
  • Copy of Property papers (if owned)
  • NOC from owner (if rented)
  • Utility bill (electricity/water/mobile)
Benefits

Benefits of Starting a Nidhi Company

Limited Liability

The liability of Directors and investors is limited. The individual resources of any of the Directors or members are not in danger of being seized by banks, creditors, or government.

Fewer Regulations

Nidhi organizations are administered under the Nidhi Rules, 2014. The Central Government is the directing power — not many rules are enforced by the RBI.

Better Credibility

Nidhi companies offer better credibility than other member-based associations like Trusts, Cooperative Societies, or NGOs.

Better Option for Savings

The main purpose is to encourage the habit of saving among members. Nidhi Companies lend and borrow money from its members only.

Easy Access of Public Funds

Loans from the Nidhi Company come at a less expensive rate than advances from banks and other NBFCs.

Micro Banking

Nidhi companies give banking services to the remote and rural public of India, who are still located in far-off lands.

Better Credit Co-operative Society

A Nidhi Company is a nearby substitute for a credit co-operative society — increasingly favored by small financers.

Simple Processing

Borrowing and lending to known people is substantially less confusing than managing banks, where the method is generic and fixed.

Easy Registration Process

You don't have to take any permits from RBI. Simply incorporate your organization as a Public Limited, with the MCA.

Single Regulatory Body

After the Amendment in Companies Act 2013, Nidhi Companies are supervised by the Nidhi Company Rules, 2014.

Low Capital Requirement

MCA mandates a base capital requirement of ₹5 lakhs for a Nidhi company. Within 1 year, capital has to be raised to at least ₹10 lakhs.

Fulfilling Lower & Middle-Income Needs

Nidhi Companies give money-related assistance without complex formalities, addressing lower and middle-income groups.

Easier Eligibility

People on minimum wages are usually unable to take loans from traditional banks. A Nidhi Company is a good option due to fewer conditions.

No External Involvement

Nidhi Companies take assets from their members and further give credit to members only. No outer variables influence the work.

Separate Entity

A Nidhi Company is a separate legal entity that can acquire assets and incur debts in its own name.

What's Included

What is Included in Our Package

DIN for 3 Directors
Digital Signature for 3 Directors
Name Search & Approval
MOA / AOA
Registration Fees
Company PAN Card
Key Features

Working of Nidhi Companies

As cited in Rule-6 of the Nidhi Rules of 2014, these are critical to note.

No Chit Fund / Leasing

It can't convey any exchanges like chit fund, leasing finance, insurance, or acquisition of securities issued by any corporation.

Members Only

It can't acknowledge deposits or offer advances to someone outside the company.

No Preference Shares

A Nidhi Company isn't engaged to give preference shares, debentures, or any other obligation instruments in any structure.

MCA Regulated

Companies Act, 2013 and Nidhi Rules, 2014 are the administering bodies and control the activities of a Nidhi Company in India.

Not Under RBI Purview

A Nidhi Company doesn't go under the purview of the RBI (only directives on deposits).

Not for Vehicle/Microfinance

It isn't designated for performing vehicle fund business or microfinance business in India.

200 Members in 1 Year

Within a year of enrollment, the number of members must be at a rate of 200.

Max 20% Interest on Loans

A maximum interest rate of 20% p.a. (calculated by the reducing balance method) can be charged.

Savings Rate Cap

The maximum rate of interest on savings deposit shall not exceed 2% above the rate offered by Nationalised Banks.

FD, RD, Savings

A Nidhi Company can acknowledge FD, RD, and reserve funds. It can earn an interest of up to 12.5%.

Regional Operations

Activities are restricted to a regional level for the initial 3 years. After 3 years, 3 workplaces can be set up in the same area.

Loans Against Security

It can only give loans against securities — Gold, Property, Fixed Deposits, Government Securities, or Life Insurance Certificates.

10% Unencumbered Deposits

Unencumbered deposits (not offered as securities) should not be less than 10% of outstanding deposits.

Mandatory Filing

Filing of Audit, Tax Returns, and Annual Accounts in the best possible configuration is necessary.

Step-by-Step

Procedure for Nidhi Company Registration

01
Step 1: Applying for DIN and DSC

The Directors of the Nidhi Company have to apply for DIN (Director's Identification Number) and DSC (Digital Signature Certificate). DIN is given by the MCA and DSC is a digital signature used for the e-filing process. This step can be skipped for Directors who already have both DIN and DSC.

02
Step 2: Name Approval

You have to pick and propose 3 distinct names to MCA for your Nidhi Company. Out of these, only one will be acknowledged. The proposed names must be unique and not similar to previously enlisted organizations. As per Rule 8 of the Companies Act, the affirmed name will stay legitimate for 20 days.

03
Step 3: MOA & AOA

These must specify the main motive of incorporating a Nidhi company. The MOA and AOA are to be filed with the ROC (Registrar of Companies) along with a subscription statement.

04
Step 4: Certificate of Incorporation (CIN)

It takes between 15-25 days to frame a Nidhi company and to get the incorporation certificate. This certificate proclaims that an organization has been made and specifies the Company Identification Number (CIN) too.

05
Step 5: PAN, TAN and Bank Account

Lastly, you need to apply for both PAN and TAN. They are usually received within 7 working days. Later, you have to get a bank account opened by submitting the Certificate of Incorporation, MOA, AOA, and PAN to the bank.

It takes 15-25 working days (approx.) to complete the Nidhi Company Registration process. The timeline may vary depending upon responses from the ROC department.
Important

Restrictions on Nidhi Company

They are prohibited to perform transactions that may involve external factors, such as:

Publicize themselves to encourage deposits
Chit funds
Leasing Finance
Hire-Purchase finances
Lotteries
Insurance
Sell, mortgage, or pledge the advantage kept with it as security for a loan
Getting into a partnership for completing lending and borrowing activities
Taking deposits or lending funds to somebody other than its investors
Issue preference shares, debentures, or other obligation instruments
Issue equity shares of the nominal value over ₹10/- each
Provide shareholder's equity shares exceeding 10 or shares of value more than ₹100/-
Open a current account with its members (Savings Account allowed)
Loan to or take a deposit from a corporate
Pay commission, fee, or incentive for mobilizing deposits
Carry on any other business than borrowing and lending to members
Hire a Purchase Financer
Pay any brokerage for granting a loan to its members
Requirements

Requirements for a Nidhi Company Incorporation

Requirements BEFORE Registration
  • Minimum 7 shareholders or members
  • Minimum 3 Directors
  • Minimum capital requirement of ₹5 lakhs
  • DIN for all Directors
  • No Preference Shares shall be issued
  • Objective: Cultivating the habit of saving by receiving deposits and lending to members only
Requirements AFTER Registration
  • By end of 1st year, 200 members minimum
  • NOF should be more than ₹10 lakhs
  • Ratio for NOF to Deposit should be more than 1:20
  • Unencumbered deposits should exceed 10% of outstanding deposits
Compliances

Compliances for Nidhi Company

NDH-1 Form

A Nidhi Company has to submit the list of members within 90 days at the end of every financial year, in this Form.

NDH-2 Form

It can request the MCA for an extension in this Form, in case it has not been able to add 200 members in its first financial year.

NDH-3 Form

A half-yearly return is required to be filed in this Form.

Annual Returns (MGT-7)

A Nidhi Company has to file its Annual Returns with MCA through Form MGT-7.

P&L and Balance Sheet (AOC-4)

The financial statements and other related documents are to be submitted annually in Form AOC-4.

Income Tax Returns

Nidhi Company, like every other business, must file its Annual Income Tax Returns by 30th September of the following financial year.

Deposits & Loans

Regulations Governing Loans and Deposits

Deposits Under Nidhi Company
  • 3 types of deposits — Savings Deposit, Fixed Deposit (FD), Recurring Deposit
  • Maximum interest up to 12.5% on FD & RD, 6% on Savings Account
  • Can deposit up to 20 times the funds invested
Loans from Nidhi Company
  • 3 types of securities accepted — Gold, Property, Others (LIC, FD, etc.)
  • Cannot engage in microfinance business but can lend up to 20% interest against security
  • Can take legal action if a member fails to repay
Why Us

Why Choose S.K. & Associates

30+ Offices

Across India

10+ Years

Industry Experience

Economical & Fast

Quick turnaround

Money Back

Guarantee

Our Clients

Trusted by Leading Brands

John Deere
Blue Tokai
Geekan
Hindustan Unilever
Rockland
Odhani
FAQ

Frequently Asked Questions

A Nidhi Company is a company that manages deposits from and loans to its members (shareholders) only, working for their mutual benefits. It is regulated by Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014.

You can register a Nidhi Company online with our platform. Fill the enquiry form, submit documents, and our team handles everything — from DIN/DSC to Certificate of Incorporation with PAN & TAN.

The 5-step process: Apply for DIN & DSC → Name Approval → Draft MOA & AOA → Get Certificate of Incorporation (CIN) → Apply for PAN, TAN, and Bank Account.

Passport-sized photographs, ID proof (PAN/Passport), Address proof (Ration Card/Aadhaar/Voter ID/Utility Bill), and Address Proof of Company with property papers or NOC from owner.

A Nidhi Company can deposit up to 20 times the funds invested (NOF to Deposit ratio should be more than 1:20). Unencumbered deposits must exceed 10% of outstanding deposits.

The maximum interest on savings deposits shall not exceed 2% above the rate offered by Nationalised Banks. Savings deposit rate is generally up to 6%.

A minimum of 3 directors are required. All directors must have a valid DIN and DSC.

Propose 3 unique names to MCA. The name must not be similar to previously registered companies. As per Rule 8, the approved name stays valid for 20 days. The name should end with "Nidhi Limited".

Nidhi Rules, 2014 is a set of rules under the Companies Act, 2013 that govern the incorporation, administration, and working of Nidhi Companies in India.

Any individual can become a member of a Nidhi Company. Minimum 7 members required at incorporation. By end of 1st year, 200 members must be there.

Within 1 year: 200 members minimum, NOF more than ₹10 lakhs, NOF to Deposit ratio more than 1:20, and unencumbered deposits exceeding 10% of outstanding deposits.

Typically 15-25 working days, depending on document readiness and MCA/ROC approval speed.

Yes, a salaried person can open a Nidhi Company. They should check their employment contract for any restrictions.

Yes, a registered office address is mandatory. It can be a residential, commercial, or co-working space. You need to provide a utility bill and NOC from the property owner.

Cannot: publicize for deposits, do chit fund, leasing finance, hire-purchase, lotteries, insurance, sell/mortgage securities, take deposits from non-members, issue preference shares, open current accounts for members, pay commission for mobilizing deposits, or carry on any other business.

DIN (Director Identification Number) is a unique number issued by the MCA to individuals who want to become directors of a company. It is mandatory for all directors.

DSC (Digital Signature Certificate) is an electronic signature used to sign documents online. It is mandatory for filing MCA forms and authenticating documents during company registration.

NOF (Net Owned Fund) is the aggregate of paid-up share capital and free reserves minus accumulated losses and deferred revenue expenditure. For Nidhi, NOF should be more than ₹10 lakhs.

A Nidhi Company can take deposits from its members only, in the form of Savings Deposit, Fixed Deposit (FD), and Recurring Deposit. Maximum interest on FD/RD is 12.5%.

Minimum 7 shareholders, minimum 3 directors, minimum capital of ₹5 lakhs, DIN for all directors, no preference shares, and the objective of encouraging savings among members.

Yes, deposits are secured because: (a) Nidhi Companies are regulated by MCA under strict rules, (b) unencumbered deposits must exceed 10% of outstanding deposits, (c) loans are given only against security, and (d) annual audits and filings are mandatory.

Funds/deposits are used only for lending to members against security (Gold, Property, FD, LIC, etc.) at reasonable interest rates. No external investments or lending outside members.

Any individual can become a member and invest in a Nidhi Company. Corporate entities cannot be members. Minimum 7 members required to incorporate.

Activities are restricted to a regional level for the initial 3 years. After 3 years, 3 workplaces can be set up in the same area. For expansion out of the region, prior approval from the Regional Director is required.

S.K. & Associates incorporates Nidhi Companies across all major Indian cities including Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, Kolkata, and more.

We have: 30+ offices across India, 10+ years of experience, 500+ Nidhi companies successfully incorporated, expert CA team, transparent pricing, fast turnaround, and money-back guarantee.