The Companies Act of 2013 governs the Nidhi Company, a form of company model that is common in India. Its only goal is to encourage savings and frugality among its members. A Nidhi is a non-banking financial organization that only offers its members services like loans and savings. So, it is possible to conclude that a Nidhi in India merely arranges funds from its owners and members, and RBI controls them. The registered Nidhi are given instructions by the Apex Bank regarding acceptable lending and depositing practices in the business world. However, Nidhi can function only within its member circle, therefore outsiders are not permitted. This promotes the practice of saving among all of its members and is founded on the idea of reciprocal benefits. The southern regions of India have a higher concentration of these businesses. Therefore, we are explaining the significance of Nidhi Company Registration and the advantages of a Nidhi Company in this article. As a result, you can also speak with the LegalRaasta team for assistance with the Nidhi Company Registration Procedure.

What is Nidhi Company?

According to the 2013 Company Act, Nidhi entities are limited companies. In Nidhi Company, the word Nidhi is derived from a word that meaning treasure. It was established with the following objectives in mind: employing funds as efficiently as possible; encouraging savings among its members; accepting deposits from and lending to its members only for their mutual advantage; and conformity with Central Government regulations. Non-Banking Financial Company(NBFC) is equivalent to Nidhi Company Registration. Nidhi Companies are created to lend and borrow money on behalf of their members.

Prohibited Activities in Nidhi Companies Registration

  • Chit money are not acceptable to Nidhi Companies.
  • Hire-purchase financing is not something Nidhi Companies can handle.
  • Leasing of funds is not something that Nidhi Companies can handle.
  • Insurance business is not something Nidhi Companies can handle.
  • Securities business is not permitted for Nidhi Companies.
  • Other than members, Nidhi Companies are unable to accept deposits from anybody else.
  • Nidhi Companies are only permitted to lend money to members.

Benefits of Starting a Nidhi Company

  • Legal existence: Nidhi Company Registration makes it a separate entity as a registered Mutual Benefit Society therefore the company can acquire or dispose of assets in its own name.
  • Limited liability: The members will be liable only for their share in the company and as a result personal liabilities of the members cannot be used to meet the company’s liabilities.
  • Availability of funds: Money are readily available: Members may borrow from their own funds at lower interest rates.

Minimum Conditions for Registration of Nidhi Companies

  • According to the Companies Act, the business must be incorporated as a public limited company.
  • A minimum of 7 shareholders are required for the business.
  • There should be a minimum of three directors for the company.
  • The company needs at least Rs. 5 lakh in equity capital.
  • The company should have at least Rs. 10 lakh in net owned funds.
  • The sole purpose of the business should be to lend and borrow money from its members.
  • 10% or more of the total outstanding deposits must be held by the company in unencumbered term deposits.
  • The ratio of Net Owned Funds to Deposits for the company should be 1:20 or below.
  • All directors must supply their Director Identification Numbers (DIN).

Documents Required for Nidhi Company Registration

  • Ownership documents or a rent or lease agreement has to be provided as a proof of address of the registered place of business.
  • PAN cards and member photos are necessary for Nidhi Company.
  • The landlord or the owner of the property where the business is registered properly signs the NOC.
  • Identity proofs and Address proofs of the members of the company.
  • Digital Signature Certificate (DSC) of the company and Director Identification Numbers (DIN) of all the directors.
  • Certified copy of the updated Memorandum of Association (MoA) of the company and Certified copy of the updated Articles of Association (AoA) of the company.

Forms needed to register Nidhi Company

  • INC 9: Each and every subscriber to the Memorandum of Association must submit the INC 9 form (MoA)
  • DIR 2: All of the company’s directors must complete and sign the DIR 2 form, as well as all of the subscribers.

Procedure for Nidhi Company Registration

  1. DIN and DSC: The applicant has to get the DIN and the DSC of all the directors of the company.
  2. Name approval:The name of a company is quite important since it conveys the first image of the business. It is also required to include “Nidhi Limited” at the end of the name.
  3. Submission of details of the members: Under MCA/ROC, the Nidhi board must receive information about each member, and the firm must have a minimum of seven shareholders. Spice part A and spice part B forms should be used to fill out the form on the MCA web portal.
  4. Submitting form: The Nidhi Company Registration Process in India will be finished by submitting an online application for incorporation of a Nidhi company.
  5. Issues certificate: The application will be reviewed and the certificate will be issued by the Ministry of Corporate Affairs.

Factors considered for selecting a name for a Nidhi Company Registration

  • The meaning of the name is the first and foremost consideration to be taken and The company’s name should not violate the Emblems and Names Act, 1950.Ideally, the name should be relevant to the company’s activities.
  • The name should be short and meaningful as it also makes your prospective customers recall the name easily.
  • The name must be original and should not sound similar to or be the same as the name of any other firm that already exists. The likelihood of the name being rejected rises as a result.
  • There shouldn’t be any legal restrictions on the firm name. Avoid using derogatory names or using names in a way that would violate the conventions or beliefs of any caste, creed, or religion.
  • The word “British India” should not be present in the name.


Due to the fact that Nidhi Company’s operations are limited to its members only, it is characterized as a mutual benefit society. It exclusively accepts deposits from its members and lends money to them. These businesses are not required to perform any chit-funds, leasing, or hire-purchase-related activities. It doesn’t call for outside assistance, accept deposits, or lend money to anyone save its members. It may be founded easily and is the least expensive type of NBFC. A Nidhi Company must have a minimum of seven members, including subscribers. It must include the name Nidhi Limited in some way. Therefore, we have included a comprehensive explanation of Nidhi Company Registration in this blog, along with a list of the processes necessary to follow. Therefore, you can speak with our legal advisor to make the Nidhi Company Registration process for your company with easier and more effective.