Nidhi Finance Company Registration Explained

Nidhi finance company registration is how many people describe starting a Nidhi, though legally the company is a Nidhi Limited and not a finance company in the RBI sense. You incorporate a public company first, then apply to the Central Government for a declaration that it is a Nidhi. This guide takes the stages in order and ends with what you can and cannot do once you are through.

In this guide

• What people mean by “Nidhi finance”
• The registration stages in order
• Key requirements at a glance
• What you can do after the declaration
• What a Nidhi cannot do
• FAQs

What people mean by “Nidhi finance”

Searches like nidhi finance, nidhi finance company and nidhi finance registration almost always point to the same thing: a mutual benefit company that takes deposits from members and lends to members. It is not an NBFC, and the RBI does not license it. If your plan is to lend to the public at large, that is another route, and Nidhi company vs NBFC explains the split. Our NBFC registration page covers the other side.

The registration stages in order

1. Choose a name that ends with “Nidhi Limited” and check it on the MCA portal.
2. Incorporate a public company through SPICe+ (INC-32) on the MCA V3 portal, with e-MOA (INC-33) and e-AOA (INC-34). PAN and TAN come with it. You need 7 members and at least 3 directors.
3. Bring in paid-up equity share capital of at least Rs 10 lakh.
4. File INC-20A for commencement of business within 180 days of incorporation.
5. File NDH-4 within 120 days of incorporation, showing at least 200 members and net owned funds of at least Rs 20 lakh.
6. Wait for the declaration. The Central Government has 45 days; if it does not decide in that time, the application is deemed approved.

The full walk-through is in our guide to Nidhi company registration.

Key requirements at a glance

Item	Requirement
Company type	Public company
Name	Ends with “Nidhi Limited”
Members and directors at incorporation	7 members, at least 3 directors
Paid-up equity capital	At least Rs 10 lakh
NDH-4 timeline	Within 120 days of incorporation
At NDH-4	200 members and net owned funds of Rs 20 lakh
Promoters and directors	Must meet fit and proper criteria

These are per the Rules as we read them, including the 2022 amendment. Check the current text on the MCA portal.

What you can do after the declaration

Once declared, the company can accept deposits from members and lend to members, within limits. Fixed deposits run 6 to 60 months and recurring deposits 12 to 60 months, with a savings balance cap of Rs 1 lakh per member. Net owned funds to deposits must stay within 1:20. Without the declaration, or if it is rejected, the company cannot take deposits from or lend to members at all, so do not open the doors early.

Budget the whole journey, not just incorporation. Our post on Nidhi company registration cost lists what to plan for, and you can ask us for a quote for your case.

What a Nidhi cannot do

Rule 6 bars a Nidhi from several activities. The ones that trip people most:

• running chit funds, hire purchase, leasing or insurance business;
• taking deposits from non-members or lending to bodies corporate;
• buying securities or debentures;
• advertising to solicit deposits or paying brokerage for them;
• operating current accounts.

A Nidhi may borrow from banks and financial institutions to lend to members, a change brought in after 2022. For how the model works day to day, see what is a Nidhi company.

Related reading

• Nidhi Company Registration in India
• Nidhi Company vs NBFC: Which Should You Start?
• Nidhi Licence: Is There One, and Does RBI Regulate Nidhi?
• What Is a Nidhi Company?
• Nidhi Company Registration Cost and Charges

Need help with your Nidhi company? See our Nidhi company registration service, call +91 93117 95484, or write to mail@taxhint.in.

FAQs

Is a Nidhi finance company the same as an NBFC?

No. It is a public company that deals only with its members and is overseen by the MCA, not the RBI.

How many members do I need for Nidhi finance registration?

Seven members at incorporation, along with at least three directors. By the time you apply for NDH-4 you need at least 200 members.

Can I take deposits right after incorporation?

Not until the NDH-4 declaration comes through. Before that, the company cannot take deposits from or lend to members.

What does Nidhi finance registration cost?

Government fees change and professional fees depend on the work involved, so ask us for a quote for your case.

More in this Nidhi series