Nidhi Company Registration

    • Easy Formation
    • Non-Compliance with Reserve Bank of India
    • Less Risk
    • Economical Registration
    • Net-owned Funding system
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Nidhi company is a business entity or business organization in the non-banking Finance sector. 

These types of companies are recognised under the Companies Act 2013, followed by section 406. The business of Nidhi company is based on borrowing and lending funds or shares between their members. 

These companies are also known as mutual benefit fund companies, mutual benefits companies, permanent fund companies, benefit fund companies, etc. 

The Ministry of Corporate Affairs governs these types of business entities in India. 

The Ministry of Corporate Affairs also resolves the directions related to these companies' deposits and their acceptance activities. 

The main objective of Nidhi company is to reserve funds among its organisation members as well as foster thrift. 

These types of business entities are very popular Southern region of India. Many people in India are also unaware of these types of business companies, whereas many people are aware of registration procedures. 

Nidhi company facts in India

Here are some main and unknown facts about Nidhi companies in India: 

  • These companies are incorporated and known as public companies.
  • The consent of RBI is not required to form these types of companies in India. Therefore, the incorporation of Nidhi company in India is very easy.
  • Incorporating Nidhi Limited at the end with the company's name is important.
  • The Undertakings and fund optimisation in Nidhi companies are similar to NBFC. Therefore they also fall under the Reserve Bank of India.
  • The objective and goals of Nidhi company revolve around in-house borrowing as well as in-house landing. There is no intervention by third parties whatsoever in the whole process.
  • The company's rental income should not be more than 20% of the overall income of the company at any point during the financial year. In addition, according to Nidhi Rules 2014, the facility of lockers is also permitted to its members on rent.

Benefits of Nidhi Company Registration in India

The major benefits of having registration of a company as Nidhi company in India are given below:

  • Formed easily: one of the main benefits of Nidhi company registration in India is a simple and easy registration process. Certain requirements need to be fulfilled for a company to be registered as a Nidhi company in India. These requirements include 7 members, of which three are appointed directors. Such requirements can be easily completed. In addition, the documentation process for Nidhi company registration is also very easy and hassle-free.
  • Non-compliance concerning Reserve Bank of India: the company that is registered as a Nidhi company in India does not require to work according to the guidelines of the Reserve Bank of India. In other words, it has non-compliance with the Reserve Bank of India. These types of companies are free to make and follow their own rules.
  • Reduced risk: the whole business and procedure of Nidhi company ensure a reduction of risk. This is because the whole process of depositing, borrowing, and lending of transactions is done by internal members only. This is the main reason due to which financial risk and financial issues are reduced to a great extent in a Nidhi company.
  • Economic registration: the entire registration process of a Nidhi company in India is not very expensive. Therefore it is very easy on the director's pocket, which is as simple as the registration of NBFC. Hence it does not affect the finances of the directors of Nidhi company. This is also another reason which makes it easier for Nidhi company to get loans for their business whenever they require for the growth of their services. The main concept and goal of Nidhi company in India are to promote financial savings among Indian people.
  • Convenient funding system: the entire funding system of a Nidhi company is based on a net-owned system. This means that transactions and investments in the business in order to raise funds are done for the same amount. This is one of the main reasons why Nidhi company is cause effective for the directors and owners to achieve company growth. 

Requirements for incorporating Nidhi company in India

Here are the basic requirements set by the government authorities for the registration of a Nidhi company in India: 

  • A Nidhi company should have a minimum of 7 members for its registration. In addition, out of these seven members, a total of three members should be designated as directors.
  • The minimum share capital of the Nidhi companies should be 5 lakh rupees.
  • According to the provisions mentioned under the Companies Act 2013, the company should have 'limited company status'.
  • It is necessary to include the objective of the company in MOA. This reflex the intention of the company in the habit of savings and thrift among its members.

Documents required for the registration of Nidhi company in India

Here is the list of documents that are necessary to have during the Nidhi Company Registration in India: 

  • DIN or directors identification number is required during registration.
  • PAN number of the members, as well as directors, is required during registration.
  • Address proof and residential proof of members and directors is required during registration.
  • Photographs of concerning members and directors are required during registration.
  • Identification documents such as the Aadhar card of members and directors are required during registration.
  • Proof of registered business place or address, such as a rent agreement or lease Agreement, is required during registration.
  • If someone owns the business space, then the ownership proof of the company is required during registration.
  • NOC is required during registration if stated.
  • AoA or article of association is required during registration.
  • MoA or memorandum of association is required during registration. 

Registration procedure for Nidhi company in India

  • The first step of registration for Nidhi company in India requires obtaining a digital signature certificate as well as a director identification number from the required agency of MCA. The agencies charge basic and standard fees for these services as well as documentation for the same. A digital signature certificate is required to authenticate the documents electronically. It is the most secure as well as the legit process of signing documents and e-form.
  • The second step requires the approval of the name of the company. The preference is for their Nidhi company should be made on the best three names to the Ministry of Corporate Affairs. One of these names will be accepted by the Ministry of Corporate Affairs. The name of the company should be unique as well as correct. The approved name of Nidhi company stays valid for 20 days only.
  • The third step to registering a Nidhi company after getting its name approved is filing an application by the directors. These applications should be filed with a memorandum of association as well as an article of association. 
  • This is the last step in the registration process of Nidhi company. The certificate for incorporation of a Nidhi company is appointed in just 15 or 20 days from the appropriate authority. The company identification number or CIN is also contained in this certificate of the Nidhi company.

Therefore the registration process for a Nidhi company in India is very simple and easy. 

As mentioned, there should be at least seven shareholders as well as three directors for a company to start as a limited company in India. 

The objective of the company should be cleared and mentioned in MOA. In addition, there are also some criteria for a Nidhi Limited company in India to be completed in the first year after registration. 

The company should not have less than 200 members or shareholders. The total owned funds or NOS of the Nidhi company should be 10 lakh rupees or more than 10 lakh rupees. 

The deposits should not be less than 10% of the outstanding deposit. The ratio of net owned funds and a deposit should not be more than 1:20. 

In the case where the Nidhi company fails to meet the above requirements, the company would be closing within 30 days of the first financial year. 

The form NDH 2 should be applied to the regional director to get some extension of time. 

In addition, if the company is still unable to meet these requirements in the second financial year, then the company cannot accept any further deposits from the second financial year. 

This condition applies to the Nidhi company until and unless it complies with all the required provisions. 

Restrictions for a Nidhi company

The Nidhi Rules 2014 and Rule 6 of Nidhi Rules 2014 state that the company should not engage in the following activities: 

  • Open current accounts with the shareholders or members.
  • Pledge assets that the members acquire as security.
  • Lend money or take deposits to corporations.
  • Entering into any kind of partnership agreement during lending activities or borrowing activities.
  • Lend shares or accept deposits from any other party other than its members.
  • Business of acquisition of security, purchase finance, lease finance, chit fund, etc., by anybody corporate.
  • Issuance of debt instruments, debentures, or preference shares by any other form or name.
  • Purchasing securities or acquiring security to control the composition of the board of directors of a different company or from entering any agreement to change the management. 


The main objective of a Nidhi company in India is to cultivate the habit of savings and thrift among its members as well as citizens of India.

One of the main benefits for Nidhi companies in India is that they can lend to and borrow from their members. 

Sometimes they are also related to the banking sector with the main goal of savings among a group of people. 

To start a Nidhi company in India and complete its process of registration, read the above article. 

The steps of registration are very easy and convenient to complete. In addition, various benefits and features are enjoyed by a Nidhi company. 

Some requirements and basic documentation are needed to complete the process of registration. These requirements are also easy to fulfil with a basic registration fee. 

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Why ESPECIA for Nidhi Company Registration

ESPECIA is well known for its team of experts in the required fields. We deliver clear information and transparency to clients and customers. 

The security and privacy of our customers are our priority. Our trusted and outstanding performance in legal and accounting matters to our clients has always been acknowledged. 

We believe in delivering the guidelines and process with simplicity. 

To start a Nidhi company in India, the first step is to apply for DSC as well as DIN. After this, the name approval and issue of AOA and MOA are required. When the above procedures have been completed, the certificate of incorporation is issued.

After the registration and incorporation of the Nidhi company, there are certain criteria to complete. There should be a minimum of 200 members in the company in the first year of incorporation of a company before the financial year. The total fund that the company owns should be more than 10 lakh rupees.

Yes, Nidhi companies are recognised and registered under section 406 of the Companies Act 2013. The Ministry of Corporate Affairs, or MCA, regulates and authorises these companies. Nidhi Rules 2014 are responsible for controlling these companies. The approval by Reserve Bank of India is not required for these companies.

These companies are regulated under the Reserve Bank of India, but seeking their approval for their registration is not important. They come under non-banking financial companies or NBFCs.

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