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What is Nidhi Company Registration?

Planning to start a finance business the Nidhi company is the best suitable business structure for an early-stage startup. The young entrepreneurs who want to enter the finance business, we suggest registering Nidhi company. Nidhi company is also a type of NBFC and it is registered under the Companies Act. 2013 Nidhi company is exempted from RBI Regulation. You will only need to select and finalize the directors and shareholders. You can register Nidhi company with 7 members and Minimum paid-up capital of Rs. 5 lacs. The Nidhi Company is a type of a Public limited company hence a minimum of 3 directors required for registration with MCA.

Members and directors can be the same person in the Nidhi company.

  • Nidhi company registration is completely an online process and it will be approved by the Ministry of Corporate affairs in 15-20 working days. 
  • Nidhi company works as a small finance bank in a district or state level subject to the fulfillment of the necessary terms and conditions lay down by the regulatory authority. The principal objectives of Nidhi company are to accept deposits from its members and give loans to its members. As per Nidhi rule 2014, You can only open one branch one district and after 3 years of profitable business, further, you can open another branch in your state. In case you wish to cover another district in the 1st year of operation then you can register another Nidhi company. 
  • The Nidhi company accept deposits include Saving Deposits, Recurring Deposits and Fixed Deposits and also Nidhi company can only give secured loan to its members other than an Auto loan. 

Principal Business of Nidhi Company

The principal business of Nidhi company has been defined as per Nidhi company rule 2014.

A. Regulation –

  1. Leverage Ratio – Nidhi company is mandatorily required to maintain a 1:20 Leverage ratio. For example, if your paid-up capital is Rs. 5 lac and then you can accept 100 Lakh as a deposit from the public.
  2. Interest Cap on Deposit – Maximum Interest on Deposit cannot be more than 12%. for saving account maximum interest rate 6% p.a. If the Government notice that a Nidhi company is offering a higher interest rate and then it shall amount to serious criminal offense against the promoters and directors of the Nidhi company.
  3. Interest Cap on Loan – Nidhi company is requiring to adopt a maximum 20% Per Annum Reducing Balance Method for interest has to be adopted for all types of loan products offered by Nidhi company. Nidhi company is also required to disclose its fair practice code on its website.
  4. RBI Approval – the affairs and administration of Nidhi company is primarily governed by the Companies Act 2013. hence, it is outside the RBI Approval process but in case of any misuse of law, RBI / Central Government can intervene take necessary action against the company and further central government has all powers by law to protect the interest of the depositors.

B. Operations

  • Branch – Nidhi company is allowed to operate one branch in first to the third year of operation. After successful completion of 3 years, you can open another branch within the state subject to the regulatory approval from the regional director of the ministry of corporate affairs (RD-MCA)
  • Secured Loan – Nidhi company can give loans against tangible security. The Popular loan product – gold loan, Loan against Property, Fixed deposit, Loan against government bonds or securities.
  • Members – The Nidhi company will require to mandatorily maintain a minimum of 200 members within 12 months of the date of registration and in case of any shortcomings, they will require to notify the MCA and obtain approval from the regional director.
  • Public records – Nidhi company and its directors are expected to publish a complete declaration about the deposit schemes to the public and keep all records online. The company Cannot take deposit outside books of accounts. Any false or misleading information to depositors will in the category of a criminal offense.

Nidhi Company Registration Process


As you know the Nidhi Limited Company registration process is completely online. While setting up the Nidhi company, the applicant company is required to be registered with the Ministry of Corporate Affairs. Our team will handle end to end registration and compliance process.

  • Digital Signatures (DSCs): Digital signature is a type of USB device which will be created by our team after OTP and identity verification of all your members and Directors.
  • Name Application: Once the name is finalized, the application shall be made in Form SPICE-Part A. it provides the option to apply for two names. The name must contain the word “Nidhi” or “Mutual Benefit” in it.
  • Drafting of MOA and AOA: The MOA is the constitution of the Company and defines various mandatory clauses of the finance business Proposed by the Nidhi company and AOA governs the internal rules and regulations for the functioning of the Nidhi Company.
  • SPICE-Part B: This is the form for incorporation and shall contain all the details about the directors, shareholders, registered office and proposed objects of the Company, as enumerated under the Nidhi Rules, 2014
  • AGILE-Pro: This is the newest form in the process of Nidhi Company Registration and contains the details about GST, ESIC, EPF registration, Professional tax Registration (Only for Maharashtra) and also you can select a bank for about Opening of Bank Account.
  • SPICE-9: This Form is a declaration by the Directors and Shareholders regarding their non-conviction from any court of law. As well as the solemn about the correctness of all the information and documents provided by them during the process of registration.
  • Grant of Certificate of Incorporation: The Ministry, after being satisfied, that the documents and details submitted in the application are correct and gives a true and fair view of the intentions of the applicant, shall grant the Certificate of Incorporation (COI) along with PAN and TAN.

Documents Required for Nidhi Company Registration

  1. ID Proof: Self-attested copy of Pan Card Election id or Passport 
  2. Any Address Proof: (Self Attested)
    1. Latest Bank Statement (Not older than two months)
    2. Latest Electricity Bill or Water Bill or Gas Bill.
  3. Registered Office Address Proof: 
  4. If the premises are owned by the Director or Shareholder or any of the related entity, then the following documents are must:
    1. Latest Electricity Bill in the name of Director or Shareholder or a related entity;
    2. NOC.
  5. If the premises are taken on rent:
    1. Rent Agreement;
    2. Latest Electricity Bill in the name of the owner;
    3. NOC.
  6. Scanned Passport size photograph of all the Directors and Shareholders;

Provisions regarding the Deposits accepted by a Nidhi Company

1

A Nidhi Company can accept all three kinds of deposits such as Savings Deposits, Recurring Deposits (RD) and Fixed Deposits (FD);

2

A Nidhi company can accept deposits from its members up to twenty times of its capital;

3

The deposits shall be accepted only through its members;

4

No deposits accepted by a Nidhi company shall be from other corporate or from any individual other than its members;

5

The Nidhi Company can distribute dividends to its members only after it has paid all its matured deposits along with the interests;

6

The maximum rate of interest to be provided on Savings Deposit shall not exceed 6% and for FD and RD, the maximum rate of interest shall not exceed 12.5%;

7

The above rates of interest have been prescribed by RBI and every Nidhi Company shall adhere to the same.

8

Within one year of its operations, Unencumbered deposits should not exceed 10 % of outstanding deposits of the Nidhi Company

Provisions regarding Loans provided by a Nidhi Company

  • Nidhi Company can provide only the secured loans to its members;
  • The security may include Gold, silver, other precious jewelry, immovable assets, FD Receipts, National Saving Certificates (NSCs) , Life Insurance policies or any other kind of government-approved security or bonds;
  • The interest rate charged on the loans provided by Nidhi Companies shall not exceed 20%;
  • Otherwise, the interest rate on loans shall not exceed seven and a half percent above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing balance method 
  • The maximum amount of loan to be provided by Nidhi Companies having deposits up to 2 crores shall not exceed INR 2 lac per member;
  • Between Deposits of 2 crores to 20 crores, the amount of loan shall not exceed 7.5 lacs;
  • Between Deposits of 20 crores to 50 crores, the amount of loan shall not exceed INR 12 lacs;
  • The loan amount of up to INR 15 lacs shall be provided only if the total deposits exceeds INR 50 crores.
  • The same rate of interest shall be charged among the same class of borrowers;
  • The rate of interest charged by Nidhi Company shall be displayed predominantly on the Notice Board at the registered office and all the branches.

Post Registration Compliances

  • 1  Minimum number of members within one year shall be 200;
  • 2  Minimum amount of capital within one year shall be INR 10 lacs.
  • 3  A Nidhi company shall not announce a dividend of more than 25 % of its profits;
  • 4  Similar amount shall firstly be transferred to the General Reserve;
  • 5  The ratio of NOF to Deposits shall always remain 1:20.

Annual Compliance for Nidhi Company 

  • Income tax Return - by 30th September of the following financial year;
  • MCA Return - Balance Sheet and Profit and Loss Statement filing in Form AOC 4 and MGT7 
  • NDH 1 – Details of members must be submitted within 90 days from the end of the Financial year. 
  • NDH 2 to be submitted for the extension of timeline in case the minimum number of 200 members has not been attained within the first financial year;
  • NDH 3 is the half-yearly return to be submitted, within 30 days of the conclusion of each half-year, and certified by a company secretary in practice or chartered accountant in practice or cost accountant in practice. 

Why Swarit Advisors?

  • 1  India No. 1 Consulting firm for NBFC Related matters 
  • 2  200 + Nidhi Company Managed 
  • 3  400+ NBFC Clients in India 
  • 4  150 + professionals including CA, CS, and CWAs;
  • 5  Pan India Support 
  • 6  Ready to use NBFC software;

Frequently Asked Questions on Nidhi Company Registration

Yes, alternatively, the word “Mutual Benefit” can also be used.

Three Directors and Seven shareholders are required, as per the provisions of a Public Limited Company.

No. The individual shall be at least 18-year-old to become a director in a Nidhi Limited.

Primarily, following documents shall be handy:

  • ID Proofs;
  • Address Proofs;
  • Bank Statements not older than 2 months;
  • Registered Office Address Proof.

INR 500,000/-. It shall be increased to INR 10,00,000/- within a time-span of one year.

No, the Nidhi company can have as number of members as possible. However, within first financial year, the minimum number of 200 members shall be attained.

A DIN is Director Identification Number and shall be unique for every director. A DIN is issued only once in the lifetime of the director. No Director shall be allocated two DIN.

Lifetime until and unless the company strike-off by the ROC. 

The government fees differs from state to state and hence there is no uniform costing. However, the whole process cost ranges from INR 16000-INR 30,000/-.

No, it can operate in only one state and that too after completion of three profitable financial statements. Till than, the Nidhi Company can operate only in one District.

The maximum balance in a savings deposit account at any given time qualifying for interest shall not exceed one lakh rupees and the rate of interest provided on such deposits shall not exceed two percent above the rate of interest payable on the savings bank account by nationalized banks.

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