Nidhi Company Registration2024-01-04T17:17:00+05:30

Nidhi Company Registration

Nidhi Company is one of the simple and easiest options to start a lending and borrowing business in India without RBI approval. It is engaged in the business of accepting deposits and providing loans to their members only and prohibits dealing with non-members.

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    What is Nidhi Company?

    Nidhi Companies are basically Non-Banking Financial Companies (NBFC) that are engaged in the business of accepting deposits and providing loans to their members. It is a company formed with the exclusive object of cultivating the habit of thrift, savings, and functioning for the mutual benefit of members by receiving deposits only from individuals enrolled as members and by lending only to individuals, also enrolled as members. Therefore, it restricts dealing with individuals who are non-members.

    The primary object of Nidhi Companies is to carry on the business of accepting deposits and lending money to member-borrowers against gold, silver jewelry, immovable property, fixed deposit receipts, National Savings Certificates, other Government Securities and insurance policies, etc.

    Also, they are not allowed to engage themselves in the business of Chit Fund, hire purchase, insurance, or in any other business including investments in shares or debentures.

    Further, Nidhi companies are incorporated in the nature of a Public Limited company and hence, they have to comply with two sets of norms, one of Public limited company as per the Companies Act, 2013 and another is the Nidhi Rules, 2014 as amended by Nidhi (Amendment) Rules, 2022.

    Nidhi Company is a class of Non-Banking Financial Companies (NBFC) and the Reserve Bank of India(RBI) has powers to issue directions and make rules for deposit-related activities. But, as Nidhi Companies deal with shareholder-members only, RBI has exempted them from the provisions of the RBI Act and other directions applicable to NBFCs. Nidhi Company is also known as the Mutual Benefit Society.

    Features of Nidhi Company Registration


    • Nidhi Company is allowed to carry on business (lending and borrowing) only with its members. Therefore, before accepting deposits or lending loans to any person, it shall induct such person as a member/shareholder of the Company.
    • A Nidhi Company shall not induct a body corporate or trust or a minor person as a member.
    • There shall be a minimum of seven (7) members at the time of incorporation. However, the number of members shall be increased to 200 within 120 days of incorporation., there is no maximum limit on the number of members.
    • The Directors of Nidhi Company shall also be its members.

    Name and Object 

    • In order to differentiate Nidhi Companies from other Public Limited Companies, it would require adding the word “Nidhi Limited” as a suffix in its name.
    • The object of the company shall be cultivating the habit of thrift and savings amongst its members, receiving deposits from and lending to its members only for their mutual benefit.


    • Nidhi Company may accept deposits from members in the form of Savings Deposits, Fixed deposits (FD), and Recurring deposits (RD)
    • The interest for fixed and recurring deposits shall be at a rate not exceeding the maximum rate of interest prescribed by RBI which the NBFC can pay on their public deposits.


    • Nidhi Company shall only give secured loans to its members against gold, silver, jewelry, immovable property, fixed deposit receipts, National Savings Certificates, Government securities, and insurance policies.

    A Nidhi Company shall give loans subject to the following limits – 

    1. Upto Rs. 2,00,000, if its total deposits from members are less than Rs. 2 crores; 

    2. Upto Rs. 7,50,000, if its total deposits from members are more than Rs. 2 crores but less than Rs. 20 crores;

    3. Upto Rs. 12,00,000, if its total deposits from members are more than Rs. 20 crores but less than Rs. 50 crores;

    4. Upto Rs.15,00,000, if its total deposits from members are more than Rs. 50 crores;

    • The rate of interest to be charged on any loan given shall not exceed 7.5% above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing the balance method
    • A member shall not be eligible for any further loan if he has borrowed any earlier loan from the Nidhi and has defaulted in repayment of such loan.


    • Nidhi Company may open branches if it has earned net profits after tax continuously during the preceding 3 financial years. It has the option to open up to 3 branches within the district, but it is not permitted to open any branch outside the state where its registered office is located.
    • If a Nidhi intends to open more than 3 branches within the district or any branch outside the district, it must seek prior permission from the Regional Director (RD). Additionally, the company must inform the Registrar about the opening of each branch within 30 days from the date of such opening.
    • If a Nidhi Company intends to close its branch, then also it shall obtain prior approval of the Regional Director. In addition, the company must inform the Registrar about the closing of each branch within 30 days of such closure.

    Benefits Of Nidhi Company Registration

    • Suitable for Middle Class and Lower Middle-Class People

      Nidhi Company mobilizes small savings, mostly from the middle-class, and lower-middle-class citizens, and disburses loans to eligible borrowers. Owing to their small size and closeness to the customers, the disbursement of loans is speedy. This is especially useful in cases where the borrower is in urgent need of funds.

    • No restriction on the number of members

      Nidhi company is a public limited company and therefore there is no prescribed limit for the maximum number of members. It can have as many shareholders as its share capital can accommodate.

    • Minimum capital requirement

      The minimum capital required for incorporation of a Nidhi Limited is Rs. 10 lakhs as per Nidhi Rules (Amendment) Rules, 2022. Therefore, the capital required for Nidhi company is much less as compared to NBFC Registration, where the capital required for registration is at least Rs. 2 crores

    • Secured Loans to its members

      Nidhi Company is allowed to provide secured loans against gold, silver, jewelry, immovable property, fixed deposit receipts, National Savings Certificates, Government Securities, and insurance policies to its members. Therefore, repayment of such loans is guaranteed, as the loans are secured, and due to peer pressure, borrowers ensure that the loan is repaid on due dates.

    • RBI Regulations not applicable

      Nidhi Company carrying out financial activities falls under the NBFC category, but it does not require any special permission from the Reserve Bank of India (RBI) for registration. Also, it is not required to comply with RBI directions or rules for the conduct of business, unless specifically required. It has to comply with the Companies Act and Nidhi Rules for the conduct of business.

    • Professional management

      The Board of Directors and management of a Nidhi company normally consists of senior persons who have experience in handling finances and who are well respected in social circles. This lends credibility to the institution and imparts confidence in the minds of borrowers and depositors.

    • Perpetual succession

      A company enjoys ‘perpetual succession’, which means it maintains continuous and uninterrupted existence until legal dissolution occurs. The death of one of its shareholders does not impact the company; instead, the shares are transferred to their family member or legal heir. Consequently, the company can carry on its business operations without any disruption.


    Every Nidhi Company shall fulfill the following conditions within a period of 1 year from the date of incorporation :

    • It should have a minimum of 200 members/shareholders
    • It should have minimum Net Owned Funds of 10 lakh rupees or more (Net owned funds would include a sum of Equity Share Capital + Free reserves – Accumulated Losses – Intangible Assets)
    • The ratio of Net Owned Funds to deposits shall not be more than 1:20 (A Nidhi Company shall not accept deposits exceeding 20 times its Net Owned Funds (NOF) as per its last audited financial statements.)
    • Unencumbered term deposits of not less than 10 percent of the outstanding deposits (At least 10% of the funds deposited in the Nidhi should be kept in a Nationalised Bank in the form of unencumbered Fixed Deposit Receipts and the remaining 90% should be used for business purpose)

    Note: According to Nidhi (Amendment) Rules, 2022, the above requirements do not apply to companies that are formed as a Nidhi Company on or after the date of commencement of such rules i.e. 19th April 2022.


    A registered Nidhi Limited Company shall not carry out the following activities –

    • Business of chit fund, hire purchase finance, leasing finance, insurance, or acquisition of securities issued by any body corporate
    • Issue preference shares, debentures, or any other debt instrument
    • Open any current account with its members
    • Accept deposits from or lend to any person, other than its members
    • Carry on any business other than the business of borrowing or lending in its own name
    • Pledge any of the assets lodged by its members as security
    • Take deposits from or lend money to any body corporate.
    • Enter into any partnership arrangement in its borrowing or lending activities
    • Issue or cause to be issued any advertisement in any form for soliciting deposit.
    • Acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management.
    • Pay any brokerage or incentive for mobilizing deposits from members or for the deployment of funds or for granting loans.
    • Raise loans from banks or financial institutions or any other source for the purpose of advancing loans to members of Nidhi.

    Minimum Requirements for Incorporation of Nidhi Company

    • Minimum 3 Directors

    • At least 1 Director shall be a permanent resident of India

    • Minimum capital of 10 lakh Rupees

    • DIN & DSC’s for all Directors/Shareholders

    • Minimum 7 Shareholders

    What Does Our Nidhi Company Registration Package Includes?

    • Company name search and approval

    • Digital Signature Certificate (DSC) for 7 Director/Shareholder

    • Director Identification Number (DIN) for 3 Directors

    • Certificate of Incorporation/Registration

    • Company PAN and TAN

    • Memorandum (MOA) and Articles (AOA)

    • Supporting Document for opening Bank Account

    • Employees State Insurance Corporation Registration (ESIC) and Employees Provident Fund Registration (EPFO)

    • Professional Tax Registration (For Companies registered in the state of Maharashtra and Karnataka only)

    • Company Master File Kit

    Registration Process for Nidhi Company in India

    • Application for Name Approval

      An applicant has to provide 2 different names and main objectives for the proposed company. These names are then submitted to MCA, and MCA will approve one out of the two names. If the initial 2 names are rejected, then we can apply with a further 2 names as a resubmission. In addition, names provided should ideally be unique and suggestive of company business. Further, the name shall end with the words “Nidhi Limited”.

    • Application for Digital Signature Certificate (DSC)

      The next step is to apply for obtaining a Digital Signature Certificate (DSC) of directors and shareholders for the digital signing of forms. However, if the directors/shareholders already have DSC, then this step can be skipped.

    • Final Submission of SPICE+ forms along with MOA and AOA

      Once the name is approved and the Digital Signature Certificate (DSC) is generated, we must create and submit an incorporation application in SPICE+ form. This submission should include the Memorandum of Association (MOA), Articles of Association (AOA), and AGILE form for obtaining final approval. 

    • Get the incorporation Certificate, PAN, and TAN

      It typically takes 3-5 days after final submission to get the incorporation certificate. An incorporation certificate is the proof of registration of a company. PAN, TAN, ESIC, EPFO, and Professional Tax registration certificates will also be received simultaneously.

    • Opening of Bank Account

      You can submit the Incorporation certificate, MOA, AOA, PAN, TAN, and other required documents to the bank to open your current account and start the business operations.

    • Application for Declaration as Nidhi Company

      Once a company is incorporated, it should make an application to the Central Government in Form NDH-4 (along with fees) to be declared as a Nidhi Company. The application shall be made within 120 days of incorporation of the company. 

      Further, a company should fulfill the following two conditions for making an application to be declared as a Nidhi Company – 

      1. It should have at least 200 members. 
      2. The Net Owned Funds of the company shall be Rs. 20 lakhs or more.

    Documents Required in Nidhi Company Registration

    • List of documents of Director and Shareholders

      All the proposed directors and shareholders of the company shall submit the following documents.

      Scanned copy of – 

      • PAN Card or Passport (Foreign Nationals & NRIs)
      • Aadhaar Card/Voters ID/Passport/Driving License
      • Latest Bank Statement/Telephone Bill/Post-paid Mobile Bill/Electricity Bill (The address proof shall be recent and not older than 2 months)
      • Passport-sized photograph

      In the case of foreign nationals or NRI Directors and Shareholders, the documents list can be checked here.
      Document Checklist for Foreign Nationals or NRI Director and Shareholders

    • Registered Office Proof

      A  Company should have a registered office place in India. The office address can be residential or commercial premises. The address proof shall be recent and not older than 2 months. The following documents are acceptable proof of Registered Office Address.

      • Utility bills such as Electricity bills/Mobile Post-paid bills/Landline Post-paid bills/Gas bills/Water bill
      • No-objection Certificate from the property owner or whose name appears on such utility bill


    How much time is needed for setting up a Nidhi company in India?2021-09-03T14:44:05+05:30

    On average it takes 7-12 days for completion of registration, 2 different approvals (Name Approval & Final Approval) are required from government bodies. However, this is dependent on the workload of the Central Registration Centre (CRC), MCA.

    Do I need to be physically present during this process?2021-09-03T14:43:45+05:30

    No, Nidhi company registration is a completely online process. All the required documents are filed electronically, so you would not need to be physically present at all. You would just need to send us scanned copies of all the required documents & forms.

    Who can be a member of a Nidhi Company?2021-09-03T14:43:22+05:30

    Any individual can become a member/shareholder of a Nidhi limited company including foreigners/NRI. However, such a person must be 18+ above in terms of age and should have a valid PAN card.

    Can a salaried person or a person in employment become director of a Nidhi Company?2021-09-03T14:34:10+05:30

    Yes, a salaried person or person in employment can become director of a private limited, LLP, or OPC. However, one needs to check the employment agreement if that allows for such provisions. In a lot of cases, the employers are quite comfortable with the fact that their employee is a director in another company. However, if there’s a restriction in becoming a director of a company, one can hold shares in a company and become a shareholder alternatively.

    Is there any kind of approval required from the Reserve Bank of India (RBI) for Nidhi Company registration?2021-09-03T14:29:51+05:30

    No, there is no kind of approval required from RBI for Nidhi Company registration.

    Is it required to have a Nidhi company’s books audited?2021-09-03T14:29:25+05:30

    Yes, a Nidhi Company should get its book audited and file the same with the Registrar of Companies (ROC) every year.

    Can I register a Nidhi Company at my home or residential address?2021-09-03T14:29:05+05:30

    Yes, you can register the company at their residential address. You need to submit the utility bill copy of your home address along with the No Objection Certificate from the owner of the premises.

    Can directors and shareholders be the same person in the company?2021-09-03T14:27:46+05:30

    Yes, directors and shareholders can be the same person in a company. But if you want to have separation in ownership and management then you can appoint a different individual as shareholder and director.

    Can I induct any other Company or LLP as a member/shareholder in Nidhi Company?2021-09-03T14:27:04+05:30

    No, you cannot induct or allot shares to any Private Limited Company, Public Company, LLP, and Registered Society, etc. Only an Individual member can be admitted as a member in Nidhi Company.

    What are the Authorised capital and paid-up capital of the company?2021-09-03T14:15:33+05:30

    The authorised capital is the maximum limit of capital that a company may raise through the issue of shares to the shareholders. On the other hand, paid-up capital is the amount that is actually paid and subscribed by the shareholders of the company. The Paid-up capital of a company cannot exceed authorise capital of a company. Stamp duty is paid on the authorised capital of a company.

    Do I need to hold my equity shares of a Nidhi Company in dematerialized form?2021-09-03T14:13:21+05:30

    No, you are not required to hold the equity share of Nidhi Company in dematerialized form.

    Is GST mandatory for a Nidhi Company?2021-09-03T13:59:36+05:30

    GST registration is required for those businesses whose aggregate turnover crosses the prescribed limit or such business that does the inter-state supply of goods/services. So, every company has to check whether it supplies goods to different states or qualifies for the prescribed turnover limit or any such other conditions as specified under GST laws.

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