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Nidhi Company Registration

Ideal for lending and borrowing amongst members

Starting At Rs. 19,999 Onwards

SAVE 60% COST…!!!

(Takes 30-40 days)

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Procedure for Nidhi Company Registration

Though the process of registering a Nidhi Company is simple, still, assistance from a professional is advised to complete the various complex forms, filing them and within time. Moreover, the government portals and language are a bit on the difficult side, too. 

And LegalRaasta is an expert in Nidhi Company Incorporations, with over 7 years of experience in the field and successfully registering more than 500 Nidhi Companies. Our operations are spread all over India. 

Step 1: Applying for DIN and DSC

First, the Directors of the Nidhi company are to apply for DIN (Director’s Identification Number) and DSC (Digital Signature Certificate). DIN is issued by the MCA and DSC is a digital signature used for all e-filing processes. This step can be skipped for the Director who already has DIN and DSC.

Step 2: Name Approval

Now, you need to choose and suggest 3 different names to MCA for your Nidhi Company. Out of these 3 names, only one will be accepted for your Company by MCA. The proposed names must be unique and not matching to the names of other already registered companies. As per Rule 8 of the Company Act. The approved name will remain valid for 20 days only.

Step 3: MoA & AoA

Association) and AoA (Articles of Association). These must mention the main objective of incorporating a Nidhi company as a charity. The MoA and AoA are to be filed to the ROC (Registrar of Companies) with the subscription statement.

Step 4: Certificate of Incorporation (CIN)

It takes between 15-25 days to form a Nidhi company and get the incorporation certificate. This certificate declares that a company has been created and it mentions the company identification number (CIN) as well.

Step 5: PAN, TAN and Bank Account

Lastly, you need to apply for PAN and TAN. The PAN and TAN are usually received within 7 working days. Later, you have to get a bank account opened by submitting the Certificate of Incorporation, MoA, AoA, and PAN to the bank.

About Nidhi Company

The feature that differentiates Nidhi Company from other companies/NBFCs etc. is that Nidhi deals with deposits from and loans to its members (shareholders) only, and works for the mutual benefits of its members. Accordingly, certain exemptions have been provided to these companies in respect of annual compliances and taxation.

Nidhi Companies in India are formed, governed, and regulated by Section 406 of the new Indian Companies Act of 2013, the Companies (Nidhi Companies) Rules of 2014, and the Chapter XXVI of the Companies Rules, 2014.

The objective of incorporating a Nidhi Company is to encourage savings as well as frugality amongst its members. To fulfill this objective of cultivating the habit of saving and thrift amongst its members. Nidhi companies are allowed to take a deposit from and lend to the members only. In other words, the funds contributed to a Nidhi company come only from its members (shareholders) and are to be used only by the shareholders of the Nidhi Company.
The name “Nidhi” in Nidhi Company means “treasure” and it originates from the Hindi vocabulary.

Nidhi Company is a certain category of NBFC. Though not directly regulated by the RBI, still RBI has powers to issue directives for them related to their deposit acceptance activities. Moreover, because these Nidhis deal with their shareholder-members only, they have been exempted from the core provisions of the RBI Act and other directions applicable to NBFCs. Therefore, Nidhi Company is an ideal legal entity to take a deposit from and lend to a specific group of people.

Nidhi Company Registration

Section 406 of the Companies Act of 2013 and the Companies (Nidhi Companies) Rules of 2014 provide all the provisions concerning the incorporation and governance of the Nidhi Companies in India. 

The guidelines and directives for the Nidhi Companies are also issued by the RBI. These are mainly related to financial activities and investments by companies including the NBFCs. 

Because of the reason that the Nidhi Companies are engaged in the business of deposits and loans by its members only, certain exemptions have been provided to these companies, by the RBI.

The interest charged at the loans under a Nidhi Company is quite reasonable. The purposes these are sought are, generally, manufacturing/renovation of houses or child’s education, etc. The loans are provided against security only.

The deposits under Nidhis do not earn much interest as compared to deposits in the organized banking sector.

All lending and borrowing of the Nidhi Companies are done by its members, exclusively. Hence, such companies are also referred to as Mutual Benefit Societies. Because they work for the mutual benefit and welfare of all members. 

 If you are looking to start a business in financing or loans in India, then Nidhi Company is the best option for it.

Key Features

Some points about the working of Nidhi Companies in India, as mentioned in Rule-6 of the Nidhi Rules of 2014, are significant to note:

It cannot carry any of the following kinds of transactions. Such as leasing finance, hire purchase finance, chit fund, insurance, or acquisition of securities issued by any corporation.

It cannot accept deposits from or give loans to some external individual or corporation.

A Nidhi Company is not empowered to issue preference shares, debentures, or some other debt instruments in any form.

Companies Act 2013 and Nidhi Rules 2014 are the governing bodies regulating the functions and operations of Nidhi Company in India.

Nidhi Company does not come under the purview of RBI. Therefore, Nidhi does not need any license from RBI to operate a loan business.

It is not entitled to perform vehicle finance business or microfinance business in India.

Within 12 months of registration, the number of members must be at least 200.

A maximum interest rate of 20% p.a. (calculated by the reducing balance method) can be charged.

The maximum rate of interest that can be offered on saving deposit account shall not exceed 2% above the rate offered by Nationalised Banks.

Nidhi Company can accept FD, RD & savings and can earn an interest of 12.5% currently.

Rate of Interest that can be offered on Fixed and Recurring Deposit shall not exceed the maximum rate of interest prescribed by RBI for the NBFCs to offer on their deposits. The maximum limit of the rate of interest for NBFCs is also applicable to the Nidhi companies.

It can only give loans against security. These securities may be Gold, Property, Fixed Deposits, Government Securities or Life Insurance Certificates.

Unencumbered deposits (Deposits not offered as securities for any purpose) should not be less than 10 % of outstanding deposits.

Filing of Annual Accounts, Audit, and Tax Returns, in the proper format, is compulsory.

Some points about the working of Nidhi Companies in India, as mentioned in Rule-6 of the Nidhi Rules of 2014, are significant to note:

Benefits of Starting a Nidhi Company

The central goal behind establishing a Nidhi Company is to encourage its members to save so that they can meet their financial requirements arising from time to time smoothly. By being thrifty they become self-sufficient and would meet the future expenses that may come up. And the benefit of getting a company registered as Nidhi doesn’t end there.

There are many more advantages to forming a Nidhi Company. Some are listed below:

Liability is Limited : Liability of Directors and shareholders of the Nidhi Company is limited. In case the company suffers from any loss and faces financial distress in the course of its business activity, the personal assets of any of the Directors or members are not at risk of being seized by banks, creditors, and government.

Less Regulations : Nidhi companies are governed under the Nidhi Rules, 2014. The Central Government is the regulating authority controlling its activities and operating. Guidelines imposed by the RBI on Nidhis are very few.

Better Credibility : Nidhi companies enjoy better credibility as opposed to any other members based organizations like Trusts, Cooperative Societies or NGOs.

Better Option for Savings : The main purpose of Nidhi Company’s incorporation is to encourage the habit of saving among the members of the Company. This is how it achieves the other goal of its registration of being mutually beneficial. The Nidhi Companies are to lend and borrow money to and from its shareholders/members only.

Easy Access of Public Funds : The loans from the Nidhi Company come at a cheaper rate than loans from banks and other NBFCs. For its shareholders. And the process of obtaining the loan and customized services are much more convenient and quicker.

Ease of Fund : Nidhi Company is the safest and the cheapest way of inviting deposits from the general public. You just need to take them as registered members.

Micro Banking : Nidhis provide banking services to the remote and rural public of India which still is based in far-off locations and is, hence, devoid of accessing finance from national banks and NBFCs.

Better Credit Co-operative Society : Nidhi Company is a close substitute for credit co-operative society. And, therefore, more preferred by the small financer. Once a Nidhi company has been registered, the members can avail of all the benefits of credit co-operative society.

Simple Processing : Borrowing and lending to known persons, belonging to the same group, is much less complicated than dealing with banks, where the procedure is impersonal and fixed.

Easy Registration Process : The process to register Nidhi Company with LegalRaasta is quite simple and transparent. You don’t need to take any license from RBI. You just have to incorporate your company as a public limited one with the MCA.

Single Regulatory Body : After the Amendment in Companies act 2013, Nidhi Companies are overseen by Nidhi Company Rules.

Low Capital Requirement : Ministry of Corporate Affairs (MCA) commands that the minimum capital requirement of Rs. 5 lakhs for Nidhi. And, within 1-year, the capital has to be raised to at least Rs. 10 lakhs. The Fees, DIN, DSC & Other Expenses are approx. Rs. 25-30,000. These include Government fees that differ from State to State.

Fulfilling the needs of Lower & Middle-income groups : Nidhi Companies play an important role in meeting the needs of lower and middle-income groups by providing them financial help without complex formalities and documentation.

Easier Eligible : People getting minimum wages and belonging to lower strata are usually unable to take loans from traditional banks because of their high eligibility criteria. For them, Nidhi Company is a good option to obtain finance because of fewer conditions.

No External Involvement : Nidhi Companies take funds from their members and further provides loans to their members only. All transactions are done within this group only. So, no external factors are affecting the working of these companies. The investors/members themselves oversee the operations of the company.

Separate Entity : Nidhi Company is a separate legal entity that can acquire assets and incur debts in its own name.

Requirements for Nidhi Company Incorporation

Given below are the essential conditions that must be met with for registering or operating a Nidhi Company.

Requirement before Registration

  • Minimum number of shareholders or members – 7
  • Minimum number of Directors -3
  • The minimum capital requirement is of Rs. 5 lakhs
  • DIN for Directors
  • Minimum 3 Directors.
  • No Preference Shares shall be issued.
  • The objective of the company shall be cultivating the habit of saving by receiving deposits from and lending to its members only for their mutual benefits.

Requirement after Registration

  • By the end of the 1st year, the number of members or shareholders of the Nidhi Company must be 200 at least.
  • NOF should be more than Rs. 10 lakhs.
  • The ratio for NOF to Deposit should be more than 1:20.
  • Unencumbered deposits should exceed 10 % of outstanding deposits.

Documents Required For Public Limited Registration

Passport Sized photographs of all the directors.

ID proof of all the designated directors and shareholders. (PAN card and Passport are valid).

Address proof of all the directors and members (Ration Card, Aadhaar Card, Passport, Voter ID, and Utility Bill – electricity/water/mobile).

Address Proof of the Company. Make sure that the address proof is not older than 2 months.

Copy of the Property papers (if the property is owned).

NOC (No-Objection-Certificate) from the owner (if the property is rented).

What is included in Our Nidhi Company Registration Package

DIN for 2 Partners

Digital Signature For 2 Directors

Name search & approval


Registration Fees

Company Pan Card

Compliances for Nidhi Company

NDH-1 Form : A Nidhi Company has to submit the list of members within 90 days from the end of every financial year, in this Form.

NDH-2 Form : It can request MCA for an extension in this Form, in case it has not been able to add 200 members in its first financial year.

NDH-3 Form : Other than the above NDH-1 Form, a half-yearly return is also required to be filed in NDH-3 Form.

Annual Returns with ROC : The Nidhi Company has to file its Annual Returns with MCA through Form MGT-7.

Profit & Loss Statement and Balance sheet : The financial statements and other related documents are to be submitted, annually, in Form AOC-4.

Income Tax Returns : Nidhi Company, like all other businesses, must file its Annual Income Tax Returns by 30th September of the following financial year.

Deposits & Loans

Here we understand the regulations governing the loan and deposit under Nidhi Company.

Deposits under Nidhi Company

  • There are 3 types of deposit Nidhis can accept. These are Savings, Fixed Deposit (FD), Recurring Deposit.
  • Nidhi can pay a maximum interest of up to 12.5% on FD & RD and 6% on a savings account.
  • Nidhi can deposit up to 20 times the funds invested.

Loans from Nidhi Company

  • 3 types of securities can be accepted for loans on offer by Nidhi Companies. Loans can be provided against Gold, Property, Others (LIC, FD, etc.).
  • Nidhi cannot engage in the business of microfinance but can lend at up to 20% interest against security.
  • It can take legal action if a member fails to repay any sum of money.

Restrictions on Nidhi Company

Though the sole purpose of Nidhi companies is taking up non-banking financial activities, they are prohibited to perform those transactions that may involve external factors and public, taking risks, etc. Such as:

  • Advertise themselves to invite deposits,
  • Chit funds,
  • Leasing Finance,
  • Hire-Purchase finances,
  • Lotteries,
  • Insurance,
  • Sell, pledge or mortgage the assets kept with it as security for a loan,
  • Getting into a partnership for carrying out lending and borrowing activities,
  • Taking deposits or lending funds to someone other than its shareholders,
  • Issue preference shares, debentures or any other debt instruments,
  • Issue equity shares of the nominal value of over Rs. 10/- each,
  • Provide its deposit holders equity shares exceeding 10 or shares of the value of more than Rs. 100/-,
  • Open a current account with its members (though it is allowed to open a Savings Account),
  • Lend to or take a deposit from a corporate,
  • Pay commission, fee or incentive for mobilizing deposits,
  • Carry on any other business than borrowing and lending to its members,
  • Hire a Purchase Financer,
  • Pay any brokerage for granting a loan to its members.

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Frequently Asked Questions

What is Nidhi Company?

Nidhi Company is a category of Non-Banking Financial Company (NBFC) that does not require any license from the Reserve Bank of India (RBI). It is formed for the sole purpose of accepting deposits and lending loans to its members only. It works through its members only.

Who can get Nidhi Company Registration?

The Nidhi company must be registered as a Public Limited Company, under the Companies Act, 2013. This essentially means that there are at least 3 Directors and 7 Shareholders. Further, its MoA (Memorandum of Association) must state that the main objective of the proposed company is to promote thriftiness and a habit of savings among its members.

What is the process of Nidhi Company Registration?

1. Apply for DIN & DSC,
2. Search a unique name in 3 options and get approved by ROC for 1,
3. Submit of MoA & AoA,
4. Certificate of Incorporation & CIN,
5. Take PAN, TAN & Bank Account.

What documents are required for Nidhi Company Registration?

• Director’s PAN Card copy (ID proof),
• Passport size photograph of Directors,
• Copy of address proof of Director,
• Copy of address proof of company. Property proof (If owned property), Rent agreement (in case of rented property), electricity/water bill, etc. are valid,
• Landlord NOC (in case of rented property).

What is the limit on deposits in Nidhi Company?

A Nidhi company is not to accept deposits of more than 20 times of its Net Owned Funds (NOF) as per its last audited financial statements.

What is the maximum limit of saving bank account?

The maximum balance in a savings account of one member of a Nidhi company should not be more than Rs. 1 lakh. The maximum rate of interest that can be paid on any deposits should not be more than 2% above the rate of interest payable by nationalized banks, on such deposits.

How many Directors are required in a Nidhi Company?

A Nidhi can be incorporated with a minimum of 3 directors and a maximum of 15 Directors.

How do I choose the name of Nidhi Company?

You need to ensure that the name is not similar to any other company already registered. Whether it is a Private Limited, OPC, LLP or Public limited company. Also, make sure that the name is not a registered trademark taken by someone under the IP Act of India. Also, make sure that the name is not too generic. Otherwise, the ROC may reject it. Moreover, try not to use abbreviations, adjectives.
And it should end with Nidhi Limited.

What are Nidhi Rules?

Nidhi Companies are regulated by Nidhi Rules, 2014. These rules were introduced by the Central Government and contain the regulatory policies for Nidhi company operations.

Who can become a member of Nidhi Company?

Once Nidhi Company has been registered, it must meet the following requirements within 1-year:
1. Register at least 200 members.
2. Maintain minimum net owned funds (NOF) of Rs. 10 Lakh.
3. Maintain NOF to deposit ratio of 1:20.
4. Of all the outstanding deposits, at least 10% must be unencumbered term deposits.

How long does the registration process take?

You need to register the company as a limited company under the Companies Act, 2013. It takes approx 30-40 days to register a company.

Can a salaried person open a Nidhi Company?

No rules have been laid down barring a salaried person to become a director of a Nidhi Company. But your employment agreement may mention put some restrictions on you doing so.

Is a separate office required?

No, Nidhi Company can be opened at a residential address or a rented one. You do not need a market place for a registered office address.
You just need:
1. Rent agreement along with the latest rent receipt (if the place is rented).
2. NOC from the Owner.
3. House tax receipts (if the premises are owned)
4. Electricity bill.

What restrictions are there for Nidhi Company?

• Nidhi Company is prohibited to engage in chit funds, insurance, leasing finance or acquisition of securities issued by any Body Corporate.
• Nidhi Company cannot issue preference shares, debentures or any other such instrument.
• It cannot accept deposits nor lend money, other than its members.
• These companies cannot pay any incentive for mobilizing deposits.

What is DIN?

DIN or “Director Identification Number” is given to an existing Director or potential Director of any Company which is incorporated or is to be incorporated. It is a Unique Identification Number, issued by the MCA.

What is DSC?
DSC or Digital Signature Certificate means signing the documents electronically/digitally by an authorized person. It is used for signing the electronic company-related forms and statements. It cannot be used in physical documents.
What is NOF?
Nidhi Company can take deposits on what basis?
What are the requirements for registration of a Nidhi Company?
Are the deposits with the company safe and secured?
How does the Nidhi Company use the fund/deposit procured by it?
Who Can Invest in a Nidhi Company?
How can I become a Shareholder/Member of the Nidhi Company?
How many branches can a Nidhi Company open?
In which cities does LegalRaasta incorporate Nidhi Company?
Why should I choose LegalRaasta for Nidhi Company registration?
What is NOF?
NOF or Net Owned Fund = Paid up share capital + Free Reserves – Accumulated losses, deferred revenue expenditure, and other intangible assets.
Nidhi Company can take deposits on what basis?
1. Cannot accept deposits over 20 times of its NOF.
2. The time duration for Fixed Deposits is a minimum of 6 months to a maximum of 60 months.
3. For Recurring Deposits, it is a minimum of 12 months to a maximum of 60 months.
4. Nidhi Company can invest and keep invested, in unencumbered term deposits with a scheduled commercial bank (other than a co-operative bank or a regional rural bank), or post office deposits in own name, an amount which must not be less than 10% of the deposits outstanding at the close of business on the last working day of the second preceding month. In some emergency, the limit of 10% can be reduced only after seeking approval of the Regional Director.
What are the requirements for registration of a Nidhi Company?
A Nidhi company is registered as a Public Limited Company. Hence, the requirements for incorporation of a Nidhi company covered a minimum of three Directors and Seven Shareholders. However, the MOA of a Nidhi company must state that the primary objective of the proposed company is to nurture and promote a habit of thriftiness and savings among its members, and accept deposits from or lend loans only to its members, for the mutual benefits of them.
Are the deposits with the company safe and secured?
Yes, because Government of India/Ministry of Corporate Affairs/RBI has framed the laws/rules to ensure the security and safety of deposits and Nidhi companies must strictly abide by the rules and regulations framed by the Central Government.
How does the Nidhi Company use the fund/deposit procured by it?
The Company uses the funds in lending to the Shareholder/members only as per the Nidhi company rules. Nidhi Company lending is in the shape of small loans for business and microfinance.
Who Can Invest in a Nidhi Company?
Only shareholders/Members of the Nidhi Company who have a membership ID, can invest in the scheme. To be a member, you must be 18-years and above as per age proof and must be a citizen of India.
How can I become a Shareholder/Member of the Nidhi Company?
1. Business Restrictions:
– Nidhi Companies are strictly prohibited from engaging in the following types of businesses:
– Business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by anybody corporate. Nidhi Companies cannot carry on any business other than the business of borrowing or lending in its own name.2. General Restrictions :
– Nidhi Companies cannot issue any shares, debentures or any other securities by any name or in any form whatsoever.
– Nidhi Companies cannot open current account with its members. Please note, there is a restriction on current account that means you can still open savings account with the members.
– Nidhi Companies cannot issue or cause to be issued any advertisement in any form for soliciting deposit.
– Nidhi Companies cannot pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans.
How many branches can a Nidhi Company open?
A Nidhi Company can open 3 branches in its district only if it has earned profits after tax consistently during the preceding three financial years. For any additional branch, Nidhi will be first apply for approval from the Regional Director.
In which cities does LegalRaasta incorporate Nidhi Company?
LegalRaasta provides Nidhi Company incorporation services across India in all cities. We have done Nidhi company registration in Mumbai, Delhi, Gurgaon, Noida, Bangalore, Chennai, Hyderabad, Ahmedabad, Kolkata, Surat, Pune, Jaipur, Lucknow, Kanpur, Nagpur and other Indian cities.
Why should I choose LegalRaasta for Nidhi Company registration? is one of the best online service portals to help register Nidhi Companies in India. We have 10 years of experience in application of Nidhi Company registration. LegalRaasta has 30+ regional offices in India and expand its network in India with 2000+ customers for Nidhi Company.