Contact Us
Welcome To Expert Business Consultation &Solutions
At Taxhint Advisors We Offer's Nidhi Company Registration
We provide expert consultancy for company registration, GST, ITR filing, and FSSAI certifications, ensuring seamless legal compliance.
Pricing Starts At Just Rs. 10,000/-
What is Nidhi Company?
A Nidhi Company is a unique type of Non-Banking Financial Company (NBFC) in India, formed with the primary goal of cultivating the habit of savings among its members. These companies operate on mutual benefit principles, facilitating borrowing and lending solely among members. Nidhi Companies are relatively easy to set up since they do not require a license from the Reserve Bank of India (RBI) and are registered as public companies with “Nidhi Limited” in their name
Objective
The main objective of a Nidhi company is to promote savings and thrift among its members. It functions by accepting deposits and providing loans exclusively to its members, ensuring mutual benefit.
Membership
Nidhi companies are exclusively member-based organizations. They do not accept deposits or lend money to non-members, maintaining a closed financial ecosystem.
No External Involvement
Unlike other NBFCs, Nidhi companies do not participate in external financial activities such as leasing, hire-purchase, insurance, or chit fund businesses.
Minimal Capital Requirement
To incorporate a Nidhi company, the minimum capital requirement is INR 10 lakh, making it accessible for small groups aiming to foster mutual financial growth.
Characteristics and Features of Nidhi Companies
Mutual Benefit
Nidhi Companies advance the interests of their members by taking deposits and lending money. They operate on principles of mutual trust and group financial support.
Regulation
Under the Companies Act of 2013, Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA).
Limited Scope
Unlike banks and NBFCs (Non-Banking Financial Companies), Nidhi Companies have limited scope. They cannot engage in insurance, leasing, or hire-purchase financing. They are restricted to lending and borrowing only among their members.
Adding Members
Members of a Nidhi Company usually share a common interest, such as living in the same area or belonging to the same community. They participate in the company’s governance and contribute to its capital.
Corporate Structure
Nidhi Companies typically have a simple corporate structure, with members electing a board of directors to manage the organization. This ensures democratic control and member accountability.
Financial Inclusion
Nidhi Companies play a crucial role in promoting financial inclusion in rural and semi-urban areas where traditional banking services may be scarce. They provide a platform for small savers to deposit funds and access credit for various personal and business needs.
Nidhi Company Registration Procedure
Step 1: Applying for DIN and DSC
The directors must obtain a Digital Signature Certificate (DSC) and apply for a Director's Identification Number (DIN). DSC is required for all e-filing procedures.
Step 2: MoA & AoA
Clearly state the purpose of the Nidhi Company in the Memorandum of Association (MoA) and Articles of Association (AoA), then submit them to the Registrar of Companies (ROC).
Step 3: Name Approval Process
Submit three name suggestions to the MCA. One unique name will be approved, valid for 20 days.
Step 4: Application for Registration
After name approval, file an application for registration with the MoA and AoA attached.
Step 5: Certificate of Incorporation (CIN)
The Certificate of Incorporation, along with a unique Company Identification Number (CIN), is issued within 15-20 days.
Step 6: PAN, TAN, and Bank Account
Apply for PAN and TAN, open a bank account, and submit the necessary documents like MoA, AoA, and Certificate of Incorporation.
Benefits of Nidhi Company Registration
Nidhi Company registration provides several advantages for individuals and businesses looking to operate a non-banking financial company (NBFC) without RBI regulations. Below are the key benefits:
1. Easy Formation
✅ Simple Registration Process: Nidhi Companies are registered as Public Limited Companies under the Companies Act, 2013.
✅ No RBI Approval Required: Unlike other NBFCs, a Nidhi Company does not require RBI approval to operate.
2. Low Capital Requirement
✅ The minimum capital required is ₹10 lakh, making it an affordable option compared to other financial institutions.
✅ Can be started with just 7 members, making it easier for small businesses and groups.
3. Encourages Savings & Financial Inclusion
✅ Promotes Saving Habits among members by encouraging small deposits and thrift.
✅ Acts as a mutual benefit society, helping people with easy loans at low-interest rates.
4. Limited Compliance Requirements
✅ Unlike NBFCs, Nidhi Companies are subject to fewer regulatory compliances.
✅ No stringent RBI regulations apply to their operations.
✅ Annual and financial compliance is simpler and cost-effective.
5. Secure Business Model
✅ Operates on a Membership Basis: Only members (shareholders) can deposit money and avail loans.
✅ Risk is Limited: Since funds are pooled from members only, there is no external risk of bad debts.
6. No External Interference
✅ No third-party intervention, as Nidhi Companies deal only with their members.
✅ Greater transparency and accountability in managing deposits and loans.
7. Cost-Effective Loan Facilities
✅ Lower Interest Rates on Loans compared to banks and NBFCs.
✅ Members can easily avail of gold loans, property loans, and secured loans.
8. Tax Benefits
✅ A Nidhi Company is taxed like any other corporate entity, but it does not attract NBFC taxation rules.
✅ Profits earned are eligible for various deductions under the Income Tax Act.
9. Perpetual Existence
✅ Since it is a separate legal entity, the company continues to exist even if directors change.
10. Trust & Legal Recognition
✅ Registered under the Companies Act, 2013, making it a legally recognized entity.
✅ Being a Public Limited Company, it provides greater credibility and trust in the market.
Requirements After Registration Nidhi Company
Membership Quota:
Your Nidhi Company must have 200 members or shareholders before the end of the first year.
Net Owned Funds (NOF):
Your company's NOF should exceed Rs. 10 lakhs.
NOF to Deposit Ratio:
More than a 1:10 should be the ratio of NOF to deposit.
Unencumbered Deposits:
Over 10% of total deposits must be made up of unencumbered deposits.
Eligibility Criteria for Nidhi Company Registration
✅ Minimum Members: The company must have at least 7 members, out of which 3 should be directors.
✅ Minimum Capital Requirement: The company must have a paid-up capital of ₹10 lakh at the time of registration.
✅ Unique Name: The company’s name must include “Nidhi Limited” at the end.
✅ Registered Office: A valid office address is required for company registration and official communication.
✅ No External Transactions: A Nidhi Company can only accept deposits and provide loans to its members. It cannot engage in chit funds, leasing, insurance, or investment business.
✅ Membership Requirement: Within one year of incorporation, the company must have at least 200 members.
✅ Net Owned Funds (NOF) Requirement:
- The company must maintain Net Owned Funds (NOF) of ₹10 lakh or more.
- The ratio of deposits to NOF must not exceed 1:20.
✅ Restrictions on Share Capital: Nidhi Companies cannot issue preference shares.
Documents Required for Nidhi Company Registration in India
Essential documents needed before and after the registration of a Nidhi Company in India.
The PAN Card or Aadhar Card is essential for identity verification.
Provide current contact details to facilitate communication.
A recent bank statement or utility bill for address verification.
Any of these documents can be used for identity proof.
Photographs of all key personnel for company records.
Post-Incorporation Compliance for Nidhi Company
1️⃣ Mandatory Compliance Within the First Year
✅ Minimum Membership: The company must have at least 200 members within one year of incorporation.
✅ Net Owned Funds (NOF) Requirement: Maintain ₹10 lakh or more as Net Owned Funds (NOF).
✅ Deposit to NOF Ratio: The total deposit must not exceed 20 times the NOF.
✅ Unencumbered Term Deposits: At least 10% of total deposits must be kept in a fixed deposit with a scheduled bank.
2️⃣ Annual Compliance for Nidhi Companies
📌 NDH-1 (Return of Statutory Compliance)
- Filed within 90 days from the end of the financial year.
- Contains details about members, deposits, and loans.
📌 NDH-2 (Application for Extension) (if compliance is not met)
- If the company fails to meet the minimum 200 members requirement within a year, an extension can be requested by filing NDH-2 with the Regional Director.
📌 NDH-3 (Half-Yearly Return)
- Filed twice a year within 30 days from the end of each half-year (March 31st and September 30th).
📌 AOC-4 (Financial Statements Filing)
- Filed within 30 days of the AGM to report the company’s financial statements.
📌 MGT-7 (Annual Return Filing)
- Filed within 60 days of the AGM, containing details about the company’s structure and compliance.
📌 ITR-6 (Income Tax Return)
- Filed annually before September 30th of the assessment year.
3️⃣ Other Important Compliance Rules
✅ Board Meetings: Conduct at least four board meetings per year, with a gap of no more than 120 days between two meetings.
✅ Statutory Audit: A Nidhi Company must have its accounts audited by a qualified Chartered Accountant (CA).
✅ Prohibited Activities: The company cannot engage in chit funds, hire purchase, insurance, or investment business.
Nidhi Company Registration by State
Nidhi Company Registration by City
Frequently Asked Questions
A Nidhi Company is a type of Non-Banking Financial Company (NBFC) registered under the Companies Act, 2013. It primarily deals with deposits and loans among its members.
No, Nidhi Companies do not require RBI approval, as they operate under the regulatory framework of the Ministry of Corporate Affairs (MCA).
The main objective is to promote the habit of savings and provide financial assistance to its members.
No, a Nidhi Company can only accept deposits from its registered members.
The registration process involves obtaining a Digital Signature Certificate (DSC), Director Identification Number (DIN), filing a name approval request, submitting the Memorandum and Articles of Association, and obtaining a Certificate of Incorporation.
A minimum paid-up capital of ₹10 lakh is required.
At least 7 members and 3 directors are required for registration.
Yes, Nidhi Companies must file annual returns, financial statements, and statutory compliance reports with the MCA.
A Nidhi Company can open branches only after three years of operation and must obtain approval from the Registrar of Companies (ROC).
No, Nidhi Companies can only provide secured loans against gold, property, or fixed deposits.
- Cannot issue preference shares, debentures, or securities.
- Cannot carry out chit fund, hire purchase, or insurance businesses.
- Cannot accept deposits exceeding 20 times its net owned funds
A Nidhi Company is subject to corporate tax as per the Income Tax Act. It must also comply with TDS regulations on interest payments.
Yes, but dividends must comply with Nidhi Rules and should not exceed the prescribed limits.
