Nidhi Company Registration 

A Nidhi Company is a type of Non-Banking Financial Company (NBFC) recognized under Section 406 of the Companies Act, 2013 and governed by the Nidhi Rules, 2014. It is formed with the sole purpose of cultivating the habit of thrift and savings among its members and providing loans to them at reasonable rates. Unlike other NBFCs, a Nidhi Company can only deal with its members — meaning it cannot accept deposits or give loans to outsiders.

 Key Characteristics of a Nidhi Company:

• Encourages savings among members

• Accepts deposits and provides loans only to members

• No external involvement from outsiders or investors

• Governed by Ministry of Corporate Affairs (MCA) and Nidhi Rules, 2014

• Ideal for small finance and mutual benefit societies

 Basic Requirements to Register a Nidhi Company:

• Minimum 7 members (3 must be directors)

• Minimum capital of ₹10 lakhs

• Must be a public limited company

• The name must end with "Nidhi Limited"

 Key Benefits of a Nidhi Company:

• Simple and low-cost structure for micro-financing

• Legal status and better credibility than informal chit funds

• No RBI approval required (as RBI has exempted Nidhis from core NBFC regulations)

• Best suited for community-based saving and lending practices

Restrictions on Nidhi Companies in India

While Nidhi Companies offer a simplified path for savings and lending within a member-based structure, they are subject to strict regulatory restrictions to protect members and ensure responsible financial practices.

 Key Restrictions Imposed on Nidhi Companies:

1. No Business with Non-Members

• Nidhi Companies can accept deposits or lend money only to their members.

• Transactions with the general public or outsiders are strictly prohibited.

2. No Advertising for Deposits

• Cannot advertise or solicit deposits from the public.

• Promotion of financial activities is restricted to members only.

3. No Issue of Securities

• Cannot issue preference shares, debentures, or any other debt instruments.

• Raising funds must be limited to member deposits only.

4. No Engagement in Certain Businesses

A Nidhi Company is not allowed to engage in:

• Chit fund business

• Leasing or hire-purchase finance

• Insurance or acquisition of securities issued by any body corporate

5. No Partnerships for Lending

• Cannot enter into partnerships for borrowing or lending purposes.

6. No Current Account

• Nidhi Companies are not permitted to open current accounts with any of their members.

7. Loan Limits

• The amount of loans that can be granted is capped based on total deposits, as per Nidhi Rules:

  • Up to ₹2 lakhs: Max ₹2 lakhs loan

  • ₹2–20 lakhs: Max ₹7.5 lakhs

  • ₹20 lakhs and above: Max ₹15 lakhs

8. Limit on Deposits

• A Nidhi Company cannot accept deposits exceeding 20 times its Net Owned Funds (NOF).

9. No Pledging of Members' Assets

• Cannot accept assets or property from members as security beyond permitted limits and without proper documentation.

10. Branch Limitations

• Can open branches only after 3 years of continuous profitability.

• Maximum of 3 branches within a district unless special approval is obtained from the Regional Director.

Documents Required for Nidhi Company Registration in India

A Nidhi Company must be registered as a Public Limited Company, and the following documents are required for incorporation through the Ministry of Corporate Affairs (MCA).

 1. Identity & Address Proof of All Directors and Shareholders

For Indian Nationals:

• PAN Card (mandatory)

• Aadhaar Card / Voter ID / Driving License / Passport

• Latest utility bill or bank statement (not older than 2 months)

For Foreign Nationals (if applicable):

• Passport (Notarized and Apostilled/Consularized)

• Visa and proof of residence in India (if staying in India)

 2. Passport-Sized Photographs

• Recent colored photographs of all proposed directors/shareholders

 3. Proof of Registered Office Address

• Latest utility bill (Electricity/Water/Gas) of the business premises

• Rent Agreement (if rented)

• No Objection Certificate (NOC) from the property owner

 4. Digital Signature Certificate (DSC)

• Required for all proposed directors and shareholders to sign electronic forms

 5. Director Identification Number (DIN)

• DIN can be applied during incorporation through the SPICe+ (INC-32) form

 6. Memorandum of Association (MoA) and Articles of Association (AoA)

• Drafted as per Nidhi objectives (promoting thrift and mutual benefit among members)

• The company name must end with “Nidhi Limited”

 7. Declaration & Consent Documents

• DIR-2 – Consent to act as a director

• INC-9 – Declaration by subscribers and directors

• Affidavits and declarations as required under Nidhi Rules and Companies Act

 8. Capital Requirements

• Minimum authorized and paid-up share capital of ₹10,00,000

• Proof of capital infusion (bank statement or declaration)

 9. Other Optional Registrations (Post Incorporation)

• PAN & TAN (auto-issued with SPICe+ form)

• GST Registration (if applicable)

• Bank account in the name of the company

• Professional Tax / Shops & Establishment License (state-specific) 

Nidhi Company Registration Procedure in India

A Nidhi Company is a Non-Banking Financial Company (NBFC) that operates to encourage savings among its members and facilitate loans within its own member base. It must be incorporated as a Public Limited Company under the Companies Act, 2013 and governed by the Nidhi Rules, 2014.

 Step-by-Step Registration Process:

 Step 1: Obtain Digital Signature Certificate (DSC)

• All proposed directors must obtain a Class 3 DSC to digitally sign incorporation documents.

 Step 2: Apply for Director Identification Number (DIN)

• DIN can be applied through the SPICe+ (INC-32) form at the time of registration.

 Step 3: Name Reservation via RUN (Reserve Unique Name)

• File a name approval request through the RUN service on the MCA portal.

• The name must include “Nidhi Limited” and comply with MCA name guidelines.

 Step 4: Draft the MoA & AoA

• Draft the Memorandum of Association (MoA) and Articles of Association (AoA) tailored to the Nidhi objective (encouraging thrift and savings).

• Define rules for member deposits and loans.

 Step 5: File Incorporation Documents with MCA

Submit the following forms through the SPICe+ (INC-32) integrated system:

• eMoA (INC-33) & eAoA (INC-34)

• Declaration by Directors (INC-9)

• Consent to act as Director (DIR-2)

• Address proof, ID proof, and PAN of all directors

• Registered office proof (utility bill, NOC, rent agreement)

 Step 6: Certificate of Incorporation (COI)

• Upon approval, the Registrar of Companies (RoC) issues a Certificate of Incorporation, along with:

  • CIN (Company Identification Number)

  • PAN & TAN (auto-generated)

 Step 7: Open Bank Account & Deposit Capital

• Open a bank account in the company’s name.

• Deposit the minimum paid-up capital of ₹10 lakhs.

 Step 8: Apply for Nidhi Status

After incorporation, the company must:

• Appoint a minimum of 200 members within 1 year

• Maintain a Net Owned Fund (NOF) of ₹10 lakhs

• Ensure the ratio of NOF to deposits does not exceed 1:20

Once these conditions are met, file NDH-1 and NDH-2 to declare Nidhi status to the MCA.

 Timeline:

The entire registration process typically takes 15–30 working days, depending on documentation and MCA approval speed.

Compliance for Nidhi Company in India

After incorporation, a Nidhi Company must follow a specific set of post-incorporation and annual compliances under the Companies Act, 2013 and Nidhi Rules, 2014 to maintain its legal status and operate smoothly.

 Mandatory Post-Incorporation Compliances

 Annual ROC Compliances

 Statutory Requirements for Nidhi Companies

A Nidhi Company must meet and maintain the following norms within 1 year of incorporation:

•  Minimum 200 members

•  Minimum Net Owned Funds (NOF) of ₹10 lakh

•  Maintain NOF to Deposits ratio of 1:20 or less

•  At least 10% of total deposits must be in unencumbered term deposits (in scheduled bank/post office)

 Other Ongoing Compliances

•  Maintain member registers, loan registers, and deposit registers

•  Conduct board meetings and AGMs as per statutory timelines

•  Update books of accounts and financial statements

•  Audit by a qualified Chartered Accountant

•  Ensure no dealings with non-members

•  Ensure loan and deposit limits are within prescribed rules

 Penalties for Non-Compliance

Failure to comply can result in:

• Monetary penalties

• Suspension or loss of Nidhi status

• Disqualification of directors

• Prosecution under Companies Act, 2013

 Why Choose YKG GLOBAL for Nidhi Company

•  End-to-end annual compliance management

•  Timely filing reminders and compliance calendar

•  Assistance with NDH filings, audit reports, board meeting records, and more

•  Expert support to maintain legal standing and avoid penalties