What is Nidhi Company?

Nidhi Company is a type of Non-Banking Financial Company (NBFC). Its major function is lending and borrowing money to its members. The objective is to cultivate the habit of savings amongst its members and work on the principle of mutual benefits that are regulated by the Ministry of Corporate Affairs.

Nidhi Company is not required to receive the license from Reserve Bank of India (RBI), hence it is very easy and convenient to form. It is also known as Mutual Benefit Finance Company. It is registered as a public limited company and must include "Nidhi Limited" as the last words of its name.

Nidhi Company registration Process

Register your Nidhi Company Online with Lawgical Station

The process of Nidhi company registration is complicated and involves various compliances. Our experts at Lawgical Station can simplify the whole registration process for you. Register your Nidhi company online in 3 easy steps:

Step 1:

Get in touch via call or contact form

Step 2:

Provide necessary documents

Step 3:

Get your incorporation registered in 14-21 working days

Minimum requirements for Nidhi Company Registration

Minimum of seven members are required
At least three members must be the directors of the company
Minimum of 10 lakh rupees is required for Authorized capital
Minimum of 10 lakh rupees is required for share capital
Issuing preference shares not allowed
The objective of the company should be receiving deposits and lending to its members only.

Documents required for Nidhi Company Registration

Passport size photographs of members
Copy of Aadhar Card or Voter ID
Copy of PAN Card of the members
Email address and phone number
Proof of registered place of business
Bank statement (not older than two months)
No Objection Certificate from the owner of the property

Documents you'll get Post Incorporation

Post incorporation of nidhi company, you'll receive the following documents:

Certificate of Incorporation
Permanent Account Number (PAN) of the company
Tax Deduction or Collection Account Number (TAN) of the company
Articles of Association (AoA)
Memorandum of Association (MoA)
Director Identification Number (DIN)
Digital Signature Certificate (DSC)
EPF and ESIC registration documents
Company Master data

What activities are prohibited for the Nidhi Company?

As Nidhi companies are involved in a non-banking financial transaction, they are prohibited from performing the following activities:

Advertise themselves for deposits
Chit funds
Lotteries
Insurance
Leasing Finance
Hire-Purchase finances
Sell the assets of its members and keep it as a security for providing loans
Entering into a partnership firm for carrying out lending and borrowing activities
Accepting deposits or lending funds to the outsiders

Frequently Asked Questions (FAQs)

Who regulates the Nidhi Companies? Do I have to be present in-person to incorporate a Nidhi Company? What is Rule 10 of Nidhi? Can a non-member apply for a nidhi loan? Does a nidhi company issue preference shares? What is the minimum par value of nidhi company shares?

Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) in India. They are also governed by rules set out in the Companies Act 2013.

No, you don't need to be present in-person to start a Nidhi Company. The whole process can often be done online. You need to fill in the right forms and provide the necessary documents.

Rule 10 of Nidhi Rules, 2014, states that a Nidhi Company must open at least three branches only after it has gained 1000 members. Also, these branches must be within the district where the registered office of the Nidhi Company is located.

No, to apply for a loan from a Nidhi firm, you must be a registered member. Non-members are not allowed to avail themselves of the loan facility.

No, a Nidhi company is prohibited from issuing preference shares. It can only issue equity shares to its members.

Each share issued by a Nidhi company must have a minimum par value or face value of ₹ 10 (ten rupees).

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