{"id":12986,"date":"2017-03-03T05:11:36","date_gmt":"2017-03-03T05:11:36","guid":{"rendered":"https:\/\/www.legalraasta.com\/blog\/?p=12986"},"modified":"2026-04-07T17:17:46","modified_gmt":"2026-04-07T11:47:46","slug":"essential-points-nidhi-company-registration","status":"publish","type":"post","link":"https:\/\/www.legalraasta.com\/blog\/essential-points-nidhi-company-registration\/","title":{"rendered":"7 Essential points on Nidhi Company Registration"},"content":{"rendered":"<p><strong>NIDHI COMPANY<\/strong><\/p>\n<p>A Nidhi Company is one that is categorized under the Non-Banking Financial Company (NBFC) which does not involve the Reserve Bank of India license. A Nidhi Company is acknowledged under section 406 of the Companies Act, 2013. This company works with the help of its members. <strong><a href=\"https:\/\/www.legalraasta.com\/register-nidhi-company\/\">Nidhi Company incorporation<\/a><\/strong> existed even before the Companies Act 1913. Their fundamental business is borrowing and lending money between its members. It is a mutual benefiting company. They are managed and controlled by the Ministry of Corporate affairs. These companies deal with their shareholders only.<\/p>\n<p>Nidhi Company is based on the basic concept of \u201cPrinciple of Mutuality\u201d or \u201cParaspara Sahayata\u201d. They function for the common benefit of all their members or shareholders.<\/p>\n<p><strong>NIDHI COMPANY FORMATION IN INDIA<\/strong><\/p>\n<p>In order to form a Nidhi Company in India, you have to incorporate a Limited Company, under the Company Act 2013. A minimum of 3 directors and 7 shareholders are required to start a Limited Company incorporation process. Precautions must be taken to ensure that the aim of the Limited Company is that of saving its members, lending, and borrowing amongst its members only for their mutual benefit.<\/p>\n<p>After incorporation as Nidhi, the company should have:<\/p>\n<ul>\n<li>Minimum 200 share-holders<\/li>\n<li>The company should have unencumbered deposits of not less than 10% of the outstanding deposits<\/li>\n<li>The company must have Net Owned Funds (NOF) of 10 lakhs or even more<\/li>\n<li>The ratio of Net Owned Funds to deposits should not be more than 1:20.<\/li>\n<\/ul>\n<p><strong>ADVANTAGES<\/strong><\/p>\n<ul>\n<li>These are single office institutions have no outside interference.<\/li>\n<li>These are mutual benefit societies to build a habit of saving among their respected members and works for the benefit of their depositors and borrowers.<\/li>\n<li>These funds are contributed by the members of a company.<\/li>\n<li>The deposits are much lesser than handled by other institutions of the financial sector.<\/li>\n<li>It does not require any Reserve Bank of India license.<\/li>\n<li>These accept term deposits from its members only for timely and safe returns.<\/li>\n<li>These provide easy loans to members. The repayment is limited to one year and seven years, against immovable property or jewelry as security.<\/li>\n<li>Less interest rate is charged as compared to the bank loan rates.<\/li>\n<\/ul>\n<h2><span style=\"text-decoration: underline;\"><strong>7 Essential Points of NIDHI COMPANY REGISTRATION<\/strong><\/span><\/h2>\n<ul>\n<li>Nidhi Company is registered as \u2018Public Company\u2019. The registration process is somewhat same as the public companies except for some additional steps.<\/li>\n<li>Nidhi Company should be incorporated as a Public Limited Company. It needs at least of 3 directors, 7 shareholders and a minimum capital of Rs.10 lakh.<\/li>\n<li>The company should not issue preference shares<\/li>\n<li>A Nidhi company register in India should have \u2018Nidhi Limited\u2019 as part of its name<\/li>\n<li>The Net Owned Funds should be 10 lakhs or more<\/li>\n<li>Company should have unencumbered deposits of not less than 10% of the outstanding deposits<\/li>\n<li>The ratio of Net owned Funds to deposits should not exceed the ratio 1:20<\/li>\n<\/ul>\n<p><strong>PROHIBITIONS<\/strong><\/p>\n<ul>\n<li>Continuing business of chit fund, leasing finance, insurance, hire purchase or acquisition of securities issued by any corporate body<\/li>\n<li>Opening current accounts with its company members<\/li>\n<li>Business other than borrowing and lending in its own name. Nidhi Company offers lockers on rent to its members subjected to rental income from such facilities not exceeding 20% of the gross income of the Nidhi at any time during the ongoing financial year<\/li>\n<li>Accept deposits from any other members, other than its own members<\/li>\n<li>Pledge any of assets lodged by its own members as security<\/li>\n<li>Take lend or deposit money to any corporate body<\/li>\n<li>Enter into partnership in its activities of lending and borrowing<\/li>\n<li>Pay any brokerage or incentives for mobilizing deposits from members<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>NIDHI COMPANY A Nidhi Company is one that is categorized under the Non-Banking Financial Company (NBFC) which does not involve the Reserve Bank of India license. A Nidhi Company is acknowledged under section 406 of the Companies Act, 2013. This company works with the help of its members. Nidhi Company incorporation existed even before the Companies [&hellip;]<\/p>\n","protected":false},"author":15,"featured_media":12987,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[556],"tags":[],"class_list":["post-12986","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-company-articles"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>7 Essential points on Nidhi Company Registration | LegalRaasta<\/title>\n<meta name=\"description\" content=\"Nidhi Company Registration existed even before the Companies Act 1913. 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