Nidhi Company Registration

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About Nidhi Company

A “Nidhi company” is a company that manages “deposits from and loans to” it’s 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 new, “Companies Act, 2013”, the Companies (Nidhi Companies) Rules of 2014, and the Chapter XXVI of the Companies Rules, 2014

The objective of incorporating a Nidhi Company is to encourage savings among its members. Nidhi companies are allowed to take a “deposit from and lend to” it’s members only. At the end of the day, the assets added to a Nidhi company come distinctly from its members and are to be utilized uniquely by the investors of the Nidhi Company.

The name “Nidhi” in Nidhi Company signifies “treasure” and it has its roots in the Hindi vocabulary.

Nidhi Company is a specific class of NBFC. Though not directly regulated by the RBI, still RBI has powers to issue directives for them related to their deposit acceptance activities. Moreover, because these “Nidhi companies” deal with their members (shareholders) only, they have been exempted from the core provisions of the RBI Act and other directions applicable to NBFCs. Accordingly, a Nidhi Company is a perfect lawful element to take a “deposit from and loan to” a particular gathering of members.

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 the Nidhi Companies are likewise given by the RBI. These are chiefly identified with financial activities and investments by companies including the NBFCs.

The interest charged on loans under a Nidhi Company is very sensible. The advances are given against security as it were. 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 additionally allude to Mutual Benefit Societies.

In the event when you are hoping to begin a business in financing or advances in India, a Nidhi Company is the best choice for it.

Documents Required

Passport Sized photographs of all the directors.

ID proof of all the designated directors and shareholders. (PAN card and Passport are valid).

Address proof of all the directors and members (Ration Card, Aadhaar Card, Passport, Voter ID, and Utility Bill – electricity/water/mobile).

Address Proof of the Company. Make sure that the address proof is not older than 2 months.

Copy of the Property papers (if the property is owned).

NOC (No-Objection-Certificate) from the owner (if the property is rented).

Benefits of Starting a Nidhi Company

The main objective behind building up a Nidhi Company is to urge its members to save so that they can easily meet their monetary requisites emerging from time to time. By being thrifty they become independent and would meet any future expense. And the advantage of getting a company enlisted as Nidhi doesn’t end here.

There are many favourable benefits of forming a Nidhi Company. Some are listed below:

What is included in Our Nidhi Company Registration Package

DIN for 3 Directors
Digital Signature For 3 Directors
Name search & approval
Registration Fees
Company Pan Card

Key Features

Few points about the working of Nidhi Companies in India, as cited in Rule-6 of the Nidhi Rules of 2014, are critical to note:

  •  It can’t convey any of the following types of exchanges, such as “chit fund, leasing finance, insurance, or acquisition of securities” issued by any corporation.
  •  It can’t acknowledge deposits or offer advances to someone outside the company.
  •  A Nidhi Company isn’t engaged to give ‘inclination offers, debentures, or some other obligation instruments” in any structure.
  •  Companies Act, 2013 and Nidhi Rules, 2014 are the administering bodies and they only control the activities of a Nidhi Company in India.
  •  A Nidhi Company doesn’t go under the purview of the RBI.
  •  It isn’t designated for performing vehicle fund business or microfinance business in India.
  •  Within a year of enrollment, the number of members must be at a rate of 200.
  •  A maximum interest rate of 20% p.a. (calculated by the reducing balance method) can be charged.
  •  The maximum rate of interest that can be offered on a savings deposit account shall not exceed 2% above the rate offered by the Nationalised Banks.
  •  A Nidhi Company can acknowledge FD, RD, and reserve funds. It can also earn an interest of 12.5% as of now.
  •  The rate of interest that can be offered on Fixed and Recurring Deposits must not surpass the maximum rate of interest, prescribed by RBI for the NBFCs to be offered on deposits. The maximum limit of interest for NBFCs are also applicable to the Nidhi companies.
  •  Activities are restricted to a regional level for the initial 3 Years. After fulfillment of 3 years, 3 workplaces can be set up inside a similar area. For development out of the region, an earlier endorsement from the Regulator Director is required.
  •  It can only give loan against securities. These securities may be “Gold, Property, Fixed Deposits, Government Securities, or Life Insurance Certificates.”
  •  Unencumbered deposits (Deposits that aren’t offered as securities for any purpose) should not be less than 10 % of outstanding deposits.
  •  Filing of “Audit, Tax Returns, and Annual Accounts” in the best possible configuration is necessary.

Procedure for Nidhi Company Registration

Though the process of enrolling a Nidhi Company is easy to handle. Still, help from an expert is encouraged to finish different forms and to file them within time.

Furthermore, LegalRaasta is a specialist in Nidhi Company Incorporations, with more than 7 years of involvement in the field and effectively enlisting more than 500 Nidhi Companies. Our operations are spread all over India.

Step 1: Applying for DIN and DSC

To begin with, 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 an all e-filing process. This progression can be skipped for the Directors who have both DIN and DSC.

Step 2: Name Approval

Presently, you have to pick and propose 3 distinct names to MCA for your Nidhi Company. Out of these 3 names, just one will be acknowledged for your Company by MCA. The proposed names must be special and not similar/identical to the names of previously enlisted organizations. According to Rule 8 of the Companies Act, The affirmed name will stay legitimate for 20 days.

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.

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 it specifies the company identification number (CIN) too.

Step 5: PAN, TAN and Bank Account

Lastly, you need to apply for both “PAN and TAN”. The PAN and TAN 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.

Important Points

Minimum Requirement

  • A Section 8 Company gets incorporated by the MCA.
  • All necessities of the Companies Act 2013, for example, the minimum number of Directors and Shareholders, and so on must be met with.

  • Charitable Object

  • Section 8 Companies can be built up for non-benefit goals only. Any benefit earned or income received by this Company is not to be dispersed among its individuals.
  • This infers the pay will either be reinvested in the business or used for the advancement of its fundamental items, for example, charitable reason.

  • Companies Act, 2013

    must follow the arrangements recommended under the Companies Act, 2013. Maintaining Book of Accounts, Return Filing, Audits, Board Meetings, and so on.

    MoA & AoA

    A Section 8 Company will not roll out any improvements to the arrangements of its MoA and AoA without looking for an endorsement from the Central Government first.

    Voting Rights

    The voting rights of the investors of a Section 8 Company depend on the number of shares held by them. Like that of some other organization.

    Income tax

    The Company needs to follow the arrangements of the Income Tax Act.

    GST Registration

    On the off chance that Section 8 Company goes under the domain of the GST Act, it must get registered with GST.


    It may not change over itself to some other sort of organization structure without conforming to conditions, as material.

    Restrictions on Nidhi Company

    Despite the fact that the sole motive behind a Nidhi company, is taking up non-banking financial activities, they are prohibited to perform those 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 inclination offers, debentures, or some other obligation instruments,
    • Issue equity shares of the nominal estimations of over Rs. 10/- each,
    • Provide its shareholder’s value shares surpassing 10 or shares of the value of more than Rs. 100/-,
    • Open a present record with its individuals (though it is allowed to open a Savings Account),
    • Loan to or take a store from a corporate,
    • Pay commission, fee or incentive for mobilizing deposits,
    • Carry on any other business than borrowing and lending to its members,
    • Hire a Purchase Financer,
    • Pay any brokerage for granting a loan to its individuals.

    Requirements for a Nidhi Company Incorporation

    Given below are the essential conditions that must be met for registering or operating as a Nidhi Company.

    Requirement before Registration

    •  Minimum number of shareholders or members – 7
    •  Minimum number of Directors -3
    •  The minimum capital requirement is of Rs. 5 lakhs
    •  DIN for Directors
    •  Minimum 3 Directors.
    •  No Preference Shares shall be issued.
    •  The objective of the company shall be cultivating the habit of saving by receiving deposits from and lending to its members only for their mutual benefits.

    Requirement after Registration

    •  By the end of the 1st year, the number of members or shareholders of the Nidhi Company must be 200 at least.
    •  NOF should be more than Rs. 10 lakhs.
    •  The ratio for NOF to Deposit should be more than 1:20.
    •  Unencumbered deposits should exceed 10 % of outstanding deposits.

    Compliances for Nidhi Company

    Deposits & Loans

    Here we understand the regulations governing the loan and deposit under Nidhi Company.

    Deposits under Nidhi Company

    •  There are 3 types of deposits, which a Nidhi company can accept. These are “Savings Deposit, Fixed Deposit (FD), and Recurring Deposit.”
    •  Nidhi can pay a maximum interest of up to 12.5% on FD & RD and 6% on a savings account.
    •  Nidhi can deposit up to 20 times the funds invested.

    Loans from Nidhi Company

    •  3 types of securities can be accepted for loans on offer by Nidhi Companies. Loans can be provided against “Gold, Property, Others (LIC, FD, etc.).”
    •  A Nidhi Company cannot engage in the business of microfinance but can lend it up to 20% interest against security.
    •  It can take legal action if a member fails to repay any sum of money.

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    Frequently Asked Questions

    A Nidhi Company falls in the category of “Non-Banking Financial Companies (NBFCs)”, which does not require any license from the Reserve Bank of India (RBI). It is formed for the sole purpose of accepting deposits and lending loans to it’s members only.

    The Nidhi company must be registered as a Public Limited Company, under the Companies Act, 2013. This essentially means that there are at least 3 Directors and 7 Shareholders. Further, it’s “MoA (Memorandum of Association)” must state that the main objective of the proposed company is to promote thriftiness and a habit of savings among it’s members.

    1. Apply for DIN & DSC, 2. Search a unique name in 3 options and get approved by ROC for 1, 3. Submit of MoA & AoA, 4. Certificate of Incorporation & CIN, 5. Take PAN, TAN & Bank Account.

    • Director’s PAN Card copy (ID proof), • Passport size photograph of Directors, • Copy of address proof of Director, • Copy of address proof of company. Property proof (If owned property), Rent agreement (in case of rented property), electricity/water bill, etc. are valid, • Landlord NOC (in case of rented property).

    A Nidhi company is not to accept deposits of more than 20 times of it’s Net Owned Funds (NOF) as per it’s last audited financial statements.

    The maximum balance in a savings account of one member of a Nidhi company should not be more than Rs.1 lakh. The maximum rate of interest that can be paid on any deposits should not be more than 2% above the rate of interest payable by nationalized banks, on such deposits.

    A Nidhi can be incorporated with a minimum of 3 directors and a maximum of 15 Directors.

    You need to ensure that the name is not similar to any other company which is already registered (Whether it is a Private Limited, OPC, LLP, or Public limited company). Also, make sure that the name is not a registered trademark taken by someone under the IP Act of India. Also, make sure that the name is not too generic. Otherwise, the ROC may reject it. Moreover, try not to use abbreviations, adjectives. And it should end with Nidhi Limited.

    Nidhi Companies are regulated by Nidhi companies Rules, 2014. These rules were introduced by the Central Government and contain the regulatory policies for Nidhi company operations.

    1. An individual person, not a corporate body or trust, can become a member. 2. The person must be over 18 years of age and a citizen of India.

    Once a Nidhi Company has been registered, it must meet the following requirements within 1-year: 1. Register at least 200 members. 2. Maintain minimum net owned funds (NOF) of Rs.10 Lakhs. 3. Maintain NOF to deposit in a ratio of 1:20. 4. Of all the outstanding deposits, at least 10% must be unencumbered term deposits.

    It takes approximately 30-40 days to register a Nidhi company. You need to register the company as a limited company under the Companies Act, 2013.

    No rules have been laid down barring a salaried person to become a director of a Nidhi Company.

    No, a Nidhi Company can be opened at a residential address or a rented one. You do not need a market place for a registered office address. You just need: 1. Rent agreement along with the latest rent receipt (if the place is rented). 2. NOC from the Owner. 3. House tax receipts (if the premises are owned) 4. Electricity bill.

    • A Nidhi Company is prohibited to engage in “chit funds, insurance, leasing finance, or acquisition of securities” issued by any Body Corporate. • A Nidhi Company cannot issue preference shares, debentures, or any other such instrument. • It cannot accept deposits nor lend money to anyone, other than it’s members. • These companies cannot pay any incentive for mobilizing deposits.

    DIN or "Director Identification Number" is given to an existing Director or potential Director of any Company which is incorporated or is to be incorporated. It is a Unique Identification Number, issued by the MCA.

    DSC or Digital Signature Certificate means signing the documents electronically/digitally by an authorized person. It is used for signing the electronic company-related forms and statements. It cannot be used in physical documents.

    NOF or Net Owned Fund = Paid-up share capital + Free Reserves – Accumulated losses, deferred revenue Expenditure, and other intangible assets.

    1. It cannot accept deposits over 20 times of it’s NOF. 2. The time duration for “Fixed Deposits” is a minimum of 6 months to a maximum of 60 months. 3. For Recurring Deposits, it is a minimum of 12 months to a maximum of 60 months. 4. A Nidhi Company can invest and keep investing, in an unencumbered term deposit with a scheduled commercial bank (other than a co-operative bank or a regional rural bank), or in post office deposits, in it’s own name, and the amount must not be less than 10% of the deposits outstanding at the close of business on the last working day of the second preceding month. In some emergency, the limit of 10% can be reduced only after seeking approval from the Regional Director.

    A Nidhi company is registered as a Public Limited Company. Hence, the requirements for incorporation of a Nidhi company covers a minimum of three Directors and Seven Shareholders. However, the MOA of a Nidhi company must state that the primary objective of the proposed company is to nurture and promote a habit of thriftiness and savings among it’s members, and accept deposits from or lend loans only to it’s members, for their mutual benefits.

    Yes, because the Government of India/Ministry of Corporate Affairs/RBI has framed the laws to ensure the security and safety of deposits, and Nidhi companies must strictly abide by the rules and regulations framed by the Central Government.

    The Company uses the funds in lending to the Shareholder/members only as per the Nidhi company rules. Nidhi Company lends is in the shape of small loans for business and microfinance.

    Only shareholders/Members of the Nidhi Company, who have a membership ID, can invest in the scheme. To be a member, you must be 18-years or above and must be a citizen of India.

    A Nidhi Company can open 3 branches in it’s district, only if it has earned profits after tax consistently during the preceding three financial years. For any additional branch, it will first have to apply for approval from the Regional Director.

    LegalRaasta provides Nidhi Company incorporation services across India in all cities. We have done Nidhi company registration in “Mumbai, Delhi, Gurgaon, Noida, Bangalore, Chennai, Hyderabad, Ahmedabad, Kolkata, Surat, Pune, Jaipur, Lucknow, Kanpur, Nagpur, and other Indian cities.”

    “” is one of the best online service portals which helps in the registration of Nidhi Companies in India. We have 10 years of experience in the application of Nidhi Company registration. LegalRaasta has 30+ regional offices in India and has expanded it’s network in India with 2000+ customers.


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