9821399320 Chat With Us

Free Call Back by an Expert

Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality

Nidhi Company Registration - Definition

Nowadays, Nidhi Company has evolved as a popular lending mechanism for obtaining secured loans. These companies are most predominant in the Southern Parts of India. Moreover, the operations and the affairs of this company is very much similar to that of a Co-operative Society. Further, section 406 of the Companies Act, 2013, deals with the process of Nidhi Company Registration.

Furthermore, the prime reason behind incorporating this business structure is to encourage and motivate its members to save, so that they can smoothly and with ease satisfy their financial needs arising from time to time. Hence, this company is based on the principle of Mutual Benefits.

What is a Nidhi Company?

The term Nidhi Company refers to a type of NBFC (Non-Banking Financial Corporation) which is regulated and governed by the provisions of the Companies Act, 2013. The only significant feature that differentiates this Company from other companies is that this business structure deals with the deposits from and loans to its members, i.e., shareholders only, and works just for the mutual benefits of its members.

Further, it shall be noteworthy to take into consideration that the activities of this business structure do fall under the ambit of RBI (Reserve Bank of India), as it is similar to that of an NBFC. However, RBI has excused this Company from the core provisions of the RBI Act, 1934 and other regulations prevalent on an NBFC, as these Companies deals only with the money of its shareholders or members.

Basic Requirements for Obtaining Nidhi Company Registration

 The basic requirements for Incorporating a Nidhi Company are as follows:

  • A Minimum of 7 shareholders or members are required;
  • A Minimum of 3 Directors are required;
  • A Minimum of Rs 5 Lakhs needed as the capital Requirement;
  • DIN (Director Identification Number) for Directors;
  • No Preference Shares will be issued;
  • The ultimate objective of this company is to inculcate the habit of saving in its members or shareholder by receiving deposits from and lending to them only for their mutual benefits;
  • The nominal value of each equity share issued must not be less than Rs 10 per share;
  • A minimum of 10 equity shares or shares corresponding to Rs 100 should be issued to each deposit holder.

Advantages of a Nidhi Company

In India, the benefits of a Nidhi Company can be summarised as:

  • No External Involvement in the Company’s Management;
  • Easy to lend money to or raise capital or borrowings from group members;
  • Easy to manage;
  • Low capital requirement;
  • Relaxation in the number of compliances;
  • Cost-efficient registration;
  • Many privileges and exemptions are provided under the provisions of the Companies Act, 2013;
  • The Minimal involvement of RBI;
  • Secured investment with lower Rate of Interest;
  • Low level of risk;
  • Better savings option;
  • Nidhi Company Rules is the Single Regulatory Body;
  • Better substitute of a Credit Co-operative Society;
  • Enjoys the status of a separate legal entity;
  • Fulfilling the financial requirements of the lower and middle-income groups;
  • Simple processing;
  • Easy access to public funds;
  • Limited liability.

Documents Needed for the Incorporation of a Nidhi Company

The documents needed for obtaining registration can be summarized as:

  • From Directors and Shareholders:

  1. PAN Card details of the Members;
  2. Photographs of the Directors and Members;
  3. Digital Signature Certificate;
  4. Aadhar Card or Voter ID of the Members;
  5. Address Proof of the Directors;
  6. DIN (Director Identification Number) of the Directors.
  • For Registered Office:

  1. Rent Agreement or the Lease Deed or the Sale Deed of the place being used as Registered Office; or,
  2. Address Proof of the Registered Office;
  3. No-Objection Certificate (NOC) signed by the actual owner of the Property.
  • Documents which are needed to be prepared and drafted by CA or CS:

  1. MOA (Memorandum of Association) of the Company;
  2. AOA (Article of Association) of the Company;
  3. MCA (Ministry of Corporate Affairs) form attestation.

Procedure for Nidhi Company Registration

Nidhi Company Registration Procedure in India

The steps involved in the procedure for obtaining registration are as follows:

  • Obtain DSC and DIN: The First and the foremost step for all the Directors is to obtain DIN (Director Identification Number) and DSC (Digital Signature Certificate).
  • Apply for a Name Approval: Now, in the second step, the shareholders or the Directors are required to apply for a name approval by suggesting three names to the MCA (Ministry of Corporate Affairs). Further, out of all the names suggested, the MCA will choose one name for the said company. Furthermore, it shall be taken into consideration that all the names suggested must be of unique character and not similar to an already existing company’s name. Moreover, according to rule 8 of the Companies Act, 2013, the approved name will remain valid only for a period of 20 days.
  • Drafting of MOA and AOA: After completing the process of name approval, the directors need to submit the Application for registration in the form INC- 32, together with the Articles of Association (AOA) and Memorandum of Association (MOA), respectively. Further, it is significant to take into consideration that the documents must state the objective behind incorporating a Nidhi Company.
  • Certificate of Incorporation: Usually, it takes about 15-25 days time to get the Certification of Incorporation. Further, this certificate acts as a piece of evidence or proof that the said Company has been incorporated. Furthermore, this certificate also mentions the company’s CIN (Company Identification Number).
  • Opening of a Bank Account and Applying for TAN and PAN: In last, the directors need to apply for PAN (Permanent Account Number) and TAN (Tax Deduction Account Number). Further, shareholder or the members of the company is also required to get a bank account opened just by submitting the Certificate of Incorporation, and the copies MoA, AoA, along with the allotted PAN details to the bank.

Post-Nidhi Company Registration Requirements

The Post-Nidhi Company Registration requirements can be summarized as:

  • At least 200 members: According to the first requirement by the end of the 1st year, the company must have at least 200 members or shareholders. Further, it is required to submit the list of all the members within a period of 90 days starting from the end of every fiscal year, in this particular Form. In case the Company is not able to have at least 200 members, then, in that case, the shareholders or the members of the company are required to submit NDH-2 to the Regional Director. By submitting this form, the company may avail an extension of another financial year, if the same is filed within a period of 30 days starting from the end of the 1st fiscal year after commencement. Further, if even after the completion of 2nd financial year, the company fails to meet the prescribed requirements, then the same will not be qualified to accept deposits until the compliance of these provisions, and moreover, it can also attract penal consequences.
  • NOF should be more than Rs 10 Lacs: The second post-requirement talks about NOF (Net Owned Funds). The NOF of the company must be more than Rs 10 lakhs. The term Net Owned Funds denotes the Aggregate of Paid-Up Equity Share Capital and Free Reserves as reduced by the intangible assets and accumulated losses appearing in the Last Audited Balance Sheet.
  • Ratio of the NOF to Deposits: The Ratio for the Net Owned Funds to Deposit must be more than 1:20.
  • Unencumbered Deposits: Unencumbered deposits must exceed 10 percent of the outstanding deposits. Further, this business structure also needs to file a Half-yearly Return with the ROC (Registrar of Companies) in Form NDH-3(again duly certified by a Practicing CA/ CS/ CWA) together with the prescribed fees. Moreover, such form must be filed within a period of 30 days, starting from the end of each half-year.

Mandatory Compliances for Nidhi Company

The mandatory compliances for a Nidhi Company are as follows:

  • Form NDH - 1: It needs to submit the list of members within a period of 90 days starting from the end of every fiscal year, in this particular Form.
  • Form NDH - 2: If in case the company is not able to meet the target of 200 members in the first financial year, then it can request the MCA (Ministry of Corporate Affairs) for granting an extension in this Form.
  • Form NDH -3: Other than the form mentioned above, i.e., NDH-1 Form, a half-yearly return is also needed to be filed in Form NDH-3.
  • Annual Return with the ROC: It needs to file its Annual Returns with the MCA by way of Form MGT-7.
  • Profit and Loss Statement and the Company’s Balance Sheet: The financial statements and other concerned documents are required to be submitted, on an annual basis, in Form AOC-4.
  • Income Tax Returns (ITR): It needs to file Annual Income Tax Returns (ITR) by 30th September of the following financial year.

Ceiling Limit on the Loans Provided by a Nidhi Company

The ceiling limit on the loans provided by Nidhi Companies can be summarized as:

Amount of Deposits

Permissible Loan limits

If the total amount of deposit is less than Rs 2 Crore.

Rs 2 Lacs

If the total amount of deposit is between Rs 2 crore to less than Rs 20 crore

Rs 7.50 Lacs

If the total amount of deposit is between Rs 20 crore to less than Rs 50 crore

Rs 12 Lacs

If the total amount of deposit is Rs 50 crore or more

Rs 15 Lacs


Is Nidhi Company Allowed to have Branches?

Yes, a Nidhi Company is allowed to have branches but subject to following conditions:

  • The company must have earned Net Profits after Deducting Tax (PAT), continuously for the preceding three financial years.
  • This business structure is permitted to open up to three branches only. Moreover, it shall be pertinent to take into consideration that all these branches must have opened within the same district.
  • If in case it wants to set up more than three branches, it needs to seek and acquire prior permission from the RD (Regional Director). Further, these branches can be opened either within territorial limits in the same district or in a separate district.
  • The Registrar of Companies (ROC) has to be informed about the same within a period of 30 days of the opening of its branches.

Factors to Consider while Choosing Name

In India, the factors to be considered while a name for the company are as follows:

  • Meaningful;
  • Short and Simple;
  • Uniqueness;
  • Not Similar to any already existing Company’s Name;
  • Legal character;
  • Should not be offensive or illegal in nature;
  • Should not include the phrase “British India.”;
  • Suffix portion is essential.

Restrictions applicable to a Nidhi Company

In India, the Restrictions applicable to Nidhi Companies in terms of their activities are as follows:

  • Chit funds,
  • Insurance,
  • Leasing finance,
  • Advertise themselves to invite deposits,
  • Hire-Purchase finances,
  • Lotteries,
  • Sell, Mortgage or Pledge the assets kept with it as collateral security for a loan,
  • Getting into Partnerships in order to carry out lending and borrowing activities,
  • Accepting deposits or lending funds to any other person than its own shareholders,
  • Issuance of preference shares, debentures or any other type of debt instruments,
  • Issue of Equity Shares of the nominal value at over Rs. 10/- each,
  • Offer its deposit holders equity shares that, too, more ten shares or shares of the worth of more than Rs. 100/-,
  • Open a current account together with its members (although it is permitted to open a Savings Account),
  • Lend to or accept a deposit from a corporate,
  • Pay commission, incentive or fee for the mobilization of deposits,
  • Carry out any other business than lending or borrowing from its members,
  • Hire a Purchase Financer,
  • Pay any brokerage amount for granting a loan to its members.

Rules regarding the Acceptance of Deposits

The rules regarding acceptance of deposits can be summarised as:

  • Nidhi Companies are not allowed to accept deposits exceeding the threshold of twenty times of its NOF (Net Owned Funds).
  • They can accept Fixed Deposits (FD) for a minimum period of six months and a maximum period of sixty months.
  • Similarly, these companies are qualified to accept Recurring Deposits (RD) for a minimum period of twelve months and a maximum period of sixty months.

Why Choose Swarit Advisors?

  • 500 + NBFC Clients in India
  • 300+ CA and CS
  • Top Rated Nidhi Company Advisors
  • High-level Nidhi Software
  • Legal Documentation Ready
  • Dedicated Chartered Accountants
  • Dedicated Lawyers
  • Experts are available 24*7
  • Get Ready to Commence Business in 15 days.

Package Inclusion

  • DIN for Directors
  • Digital Signature for Directors
  • Name Search &Approval
  • Registration Fees
  • Company PAN Card
  • Post Registration Compliances

Frequently Asked Questions

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.




Working Process

Swarit Advisors Working Steps


Make Enquiry

Share your Contact Details and receive free consultation.


Make Payment

Make Online or Offline Payment for your Order.


Submit Documents

Submit Documents for your Order Using Online Dashboard.


Work Completed

Work will be completed by us and updates delivered Online.

Latest Post

Everything to know about Closing of a Nidhi Company

Nidhi originally means treasure; in legal terms, it is a type of Non-Banking Financial Company incorporated under Section 406 of Companies Act, 2013. The principal objective of a Nidhi Company...

Dashmeet Kaur
Dashmeet Kaur

The Ultimate Revelation of Nidhi Company Rules and Regulations

Nidhi Company is a unique form of Non-Banking Financial Company (NBFC) that has incorporated under Section 406 of the Companies Act, 2013. The Ministry of Corporate Affairs (MCA) governs Nidhi...

Dashmeet Kaur
Dashmeet Kaur

Conditions before Nidhi Company Registration Process

A company incorporated to cultivate the habit of saving amidst its members or shareholders falls under Nidhi Company. The dictionary meaning of the term Nidhi is ‘treasure’. However, in the...

Dashmeet Kaur
Dashmeet Kaur

Our Valuable Clients

Subscribe for our Newsletter

Hi! My name is Akanksha! Let's talk.