Nidhi Company Registration

Registration of Nidhi Company

Nidhi Company is one of the simplest and most secure forms of Non-Banking Financial Company (NBFC) recognized under Section 406 of the Companies Act, 2013. It is formed to promote savings, thrift habits, and mutual benefit among its members by accepting deposits and granting loans only to its members.

Unlike other NBFCs that require strict licensing from the Reserve Bank of India (RBI), a Nidhi Company operates with simpler legal requirements and limited compliance. It’s an ideal structure for those who wish to start a community-based finance business legally and safely.

Our law firm offers end-to-end Nidhi Company Registration services across India, guiding you through each step — from documentation and MCA filing to post-registration compliance and advisory.

Key Features of a Nidhi Company

• Operates only among its members (mutual benefit organization).
• Must include “Nidhi Limited” at the end of its company name.
• Governed by the Companies Act, 2013 and Nidhi Rules, 2014.
• Does not require an RBI license to operate.
• Primary objective: encourage small savings and provide easy loans to members.

Benefits of Nidhi Company Registration

1. Legal Recognition

A Nidhi Company is a legally registered financial entity recognized by the Ministry of Corporate Affairs (MCA), which ensures trust and credibility among members.

2. Encourages Habit of Saving

It promotes the culture of small savings and mutual financial support, especially within local communities and groups.

3. No RBI Approval Needed

Nidhi Companies are exempt from RBI licensing, making registration faster and compliance lighter compared to other NBFCs.

4. Limited Liability

Members’ and directors’ liability is limited to their shareholdings, protecting personal assets from business risks.

5. Low Startup and Operating Cost

No heavy capital investment is required. A minimum of ₹10 lakh paid-up capital is sufficient to begin operations.

6. Transparent and Community-Based

All transactions are transparent and occur within a closed group of members, reducing risks and ensuring better accountability.

7. Simple Management Structure

No complex legal hierarchy — directors and members manage operations with flexibility and ease.

8. Better Returns and Trust

Since the company operates for mutual benefit, members often receive better deposit interest rates and lower loan interest rates.

9. Attractive for Local Investors

Small investors, self-help groups, and community associations prefer Nidhi Companies for safe local financial growth.

Who Should Register a Nidhi Company

• Entrepreneurs planning to start a small community finance business.
• Self-help groups, societies, and mutual benefit associations.
• Local businessmen and professionals wanting to start a savings & lending institution.
• Small investors seeking secure and structured investment models.
• People wishing to operate a member-based credit or deposit system legally.

Eligibility Criteria

To start a Nidhi Company under the Companies Act, 2013 and Nidhi Rules, 2014, certain legal and financial conditions must be met. These requirements ensure that the company is established with genuine intent, adequate capital, and proper management to safeguard the interests of its members.

1. Minimum Number of Members and Directors

• A Nidhi Company must be incorporated with at least 7 members (shareholders).
• Out of these, a minimum of 3 individuals must be appointed as directors.
• All directors and members must be natural persons (no companies or entities can be members).
• The directors must be Indian residents as per the Companies Act provisions.

2. Company Name Requirement

• The name of the company must end with “Nidhi Limited” as per Rule 8 of the Nidhi Rules, 2014.
• The use of “Nidhi” signifies that the company operates as a mutual benefit financial institution.
• The proposed name must be unique, non-offensive, and not identical to any existing company or trademark.

3. Objective of the Company

• The primary objective of the Nidhi Company must be to promote thrift and savings among its members.
• It should also accept deposits and lend money exclusively to its members for mutual benefit.
• No other business activities such as chit funds, hire purchase, insurance, or securities trading are allowed.

4. Membership and Shareholding Rules

• Within one year of incorporation, the Nidhi Company must ensure that it has:

  • At least 200 members.

  • Net Owned Funds (NOF) of ₹10 lakh or more.

  • Unencumbered term deposits of at least 10% of the outstanding deposits.

• Each member must hold a minimum of 10 equity shares or shares worth ₹100, whichever is higher.

Step-by-Step Nidhi Company Registration Process

Step 1 – Obtain DSC and DIN

Apply for Digital Signature Certificate (DSC) and Director Identification Number (DIN) for all proposed directors.

Step 2 – Name Reservation

Reserve a unique company name ending with “Nidhi Limited” using the MCA portal (RUN/Spice+).

Step 3 – Draft MOA & AOA

Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) describing the company’s objectives and operating rules.

Step 4 – File Incorporation Forms

Submit SPICe+ (INC-32), INC-33, and INC-34 forms along with the required documents to the Registrar of Companies (ROC).

Step 5 – Certificate of Incorporation

Once approved, the ROC issues a Certificate of Incorporation (COI), confirming the company’s legal status.

Step 6 – Post-Registration Formalities

• Apply for PAN & TAN.

• Open a bank account in the company’s name.

• Apply for MSME (Udyam) registration, if required.

• Maintain mandatory statutory registers and accounts.

• File NDH-1, NDH-2, and NDH-3 forms for compliance.

Post-Incorporation Compliance for Nidhi Companies

After registration, a Nidhi Company must comply with:

• Filing NDH-1 (return of statutory compliances) within 90 days of incorporation.
• Filing NDH-2 for time extension (if 200 members not achieved in 1 year).
• Filing NDH-3 half-yearly return with financial details.
• Maintaining proper books of accounts, member register, and loan records.
• Conducting board meetings and annual general meetings (AGMs).
• Annual ROC filings (AOC-4, MGT-7) and income tax return.

Set up your Nidhi Company with expert legal guidance and ensure 100% compliance under the Companies Act, 2013 and Nidhi Rules, 2014.