Overview
A Nidhi Company is a type of Non-Banking Financial Company (NBFC) recognized under Section 406 of the Companies Act, 2013. It is formed with the primary objective of cultivating the habit of savings and thrift among its members. Nidhi Companies can accept deposits and provide loans only to their members, making them a popular option for small-scale financing and community-based lending. They are regulated by the Ministry of Corporate Affairs (MCA), not the RBI, which makes compliance relatively simpler.
Benefits of Nidhi Company Registration
Encourages Savings – Promotes a culture of saving among members.
Easy Access to Funds – Members can easily borrow funds at lower interest rates.
Minimal RBI Regulations – Supervised by MCA with fewer stringent requirements.
Limited Liability – Shareholders’ liability is limited to their shareholding.
Low Risk of Non-Repayment – Loans are given only to trusted members, reducing default risk.
Credibility & Trust – A registered Nidhi Company builds confidence among its members.
Requirements
Minimum Members: 7 (with at least 3 directors)
Minimum Capital: ₹5 lakh paid-up equity capital at incorporation
Unique Company Name: Must end with “Nidhi Limited”
Registered Office Address: Mandatory
Compliance: Must maintain at least 200 members and ₹10 lakh Net Owned Funds within 1 year of incorporation
Eligibility
Must be a Public Limited Company incorporated under the Companies Act, 2013.
Should only engage in borrowing and lending between its members.
Should not carry out other financial activities such as chit funds, hire purchase, or insurance.
Members must be Indian citizens, and directors must meet MCA’s “fit and proper” criteria.
Required Documents
For Directors & Members:
PAN Card & Aadhaar Card
Passport-size photographs
Address proof (Voter ID, Driving License, or Utility Bill)
For Company:
Memorandum of Association (MOA) & Articles of Association (AOA)
Proof of registered office (electricity bill, rent agreement, and NOC)
Digital Signature Certificates (DSC) and Director Identification Numbers (DIN)
Declaration of compliance and affidavits from directors
Registration Process in India
Obtain DSC & DIN – Digital signatures and identification numbers for all directors.
Reserve Company Name – Apply for name approval through the MCA’s RUN service (must end with “Nidhi Limited”).
Draft MOA & AOA – Define company’s objectives and operational rules.
File Incorporation Documents – Submit SPICe+ form with MCA, along with all documents.
Obtain Certificate of Incorporation – Issued by MCA after verification.
Post-Incorporation Compliance – Open a bank account, issue share certificates, and meet minimum membership and capital requirements within a year.
Frequently Asked Questions
No, Nidhi Companies can only accept deposits and provide loans to their members.
A minimum paid-up equity share capital of ₹5 lakh is required at the time of incorporation.
No, Nidhi Companies are governed by the MCA, and RBI approval is not mandatory.
No, they cannot carry out activities like chit funds, leasing, hire purchase, or insurance.
NBFCs cannot engage in agricultural activities, industrial production, or sale/purchase of immovable property.
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