Nidhi Company

A Nidhi Company is a unique category of Non-Banking Financial Company (NBFC) in India, established with the primary purpose of cultivating the habit of thrift, savings, and responsible borrowing among its members. Governed by Section 406 of the Companies Act, 2013 and regulated by the Ministry of Corporate Affairs (MCA), a Nidhi Company is formed to accept deposits from and lend loans to its members exclusively, ensuring the financial well-being of a close-knit community.

Key Features of a Nidhi Company

• Mutual Benefit: Transactions are strictly with and among its members, aiming for collective financial growth.

• Member-Only Operations: Only individuals can be members; companies or partnership firms are not eligible.

• Restricted Lending and Deposits: A Nidhi Company cannot lend to or accept deposits from non-members or any corporate bodies.

• Lower Interest Loans: Typically provides loans at more competitive rates than mainstream banks, benefiting its members directly.

• Public Company Status: Legally, a Nidhi Company must be incorporated as a Public Limited Company.

Advantages of Registering a Nidhi Company

• Encourages Savings: Cultivates a habit of savings within a member community.

• Simple Structure: Less complicated than other finance companies due to the mutual nature.

• Legal Recognition: Recognized by the central government under specific rules designed for their operation.

• Ease of Access: Members can avail loans easily in times of need, supporting social and economic welfare.

Basic Regulatory Conditions for Incorporation

• Must be set up and operate only as a Public Company.

• Should use “Nidhi Limited” at the end of its name.

• Minimum paid-up equity share capital required is ₹10,00,000 (ten lakhs).

• Preference shares cannot be issued under any circumstances.

• The company’s MoA must contain only those objects pertaining to receiving deposits from and lending to its members for mutual benefit.

Essential Requirements after Incorporation

Within one year of incorporation, every Nidhi Company must achieve and maintain:

• A minimum of 200 members.

• Net Owned Funds (NOF) of at least ₹20 lakhs.

• At least 10% of outstanding deposits kept as unencumbered term deposits with a scheduled commercial bank.

• Financial ratios maintained, such as a maximum NOF-to-deposit ratio of 1:20.

• At least three directors at all times.

Membership and Management

• Minimum of seven members/subscribers are required at the time of registration.

• At least three directors must be appointed to manage the company.

• All members must be individuals, and only those entered in the register of members can participate in deposits and loans.

• Directors oversee company operations and ensure full compliance with statutory guidelines.

Documents Required for Registration

• Self-attested identity proof (PAN, Aadhar, passport, voter ID, driving license) for all members and directors.

• Self-attested address proof (recent bank statement, utility bills not older than two months).

• Two recent passport-size color photographs of each member and director.

• Registered office proof (ownership or lease documents, utility bill, and relevant NOC from owner or landlord).

• Details such as authorized and paid-up share capital, number of shares subscribed, member and director background, occupation, business objective, educational qualification, email, and contact details.

Step-by-Step Registration Process

1. Name Reservation

The applicant must reserve the proposed name through the MCA’s SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) web service, ensuring that the name ends with “Nidhi Limited” and is unique.

2. Filing SPICe+ Part B, MOA, AOA, and AGILE-PRO Forms

• SPICe+ Part B includes detailed company incorporation information.

• Draft and attach the Memorandum of Association (MOA) and Articles of Association (AOA), clearly limiting the company’s activities to those prescribed for a Nidhi (primarily deposits/loans among members).

• AGILE-PRO is used to apply simultaneously for PAN, TAN, EPFO, ESIC registrations, and to open a mandatory bank account.

3. Document Signing and Uploading

All forms are converted into PDF format, digitally signed by all directors (using DSC), and uploaded to the MCA portal.

4. Declaration by Subscribers and First Directors

INC-9 declarations (for subscribers and directors) are auto-generated in PDF form and must be electronically submitted. This step is mandatory unless the number of subscribers/directors exceeds 20 or if any lack PAN/DIN.

5. Issue of Certificate of Incorporation

Upon approval by the Registrar of Companies, the Certificate of Incorporation, along with unique company identification details (CIN, PAN, TAN), is granted.

6. Compliance with Post-Incorporation Conditions

Within 12 months, the company must reach the required membership and net funds threshold, maintain the required ratio of deposits, and make timely statutory filings.

Special Rules & Ongoing Compliance

• No Preference Shares: The company cannot issue preference shares under any circumstances.

• Deposit Restrictions: Deposits are strictly from and to members, adhering to ratios and limits defined by law.

• Mandatory ESIC & EPFO Registration: As with all new companies since February 2020, these registrations and professional tax (for Maharashtra) are compulsory at incorporation.

• Bank Account Opening: It is now mandatory to open a current account during registration using AGILE-PRO.

• Annual Return Filing: Nidhi Companies must file annual returns, regular ROC filings, and comply with statutory audit requirements as per the Companies Act and Nidhi Rules.

Who Should Register a Nidhi Company?

Nidhi Company registration is ideal for community-based saving and lending activities, especially among business associations, societies, and groups seeking to formalize member-based mutual benefit finance. It is not suitable for businesses aiming to deal with the general public, or intending to scale beyond closely-held membership models.

Why Choose Kyna FinTax for Nidhi Company Registration?

Kyna FinTax specializes in Nidhi Company setup, compliance management, and financial regulatory services in all major Indian cities including Delhi, Mumbai, Bangalore, Hyderabad, Kolkata, Jaipur, Chennai, Pune, Ahmedabad, Lucknow, and more. Our experienced CA, CS, and legal experts provide:

• End-to-end advisory for strategic and regulatory compliance

• Fast, transparent, and paperless registration process

• Preparation of tailored MOA/AOA and ensuring deep compliance with Nidhi Rules

• Post-incorporation compliance, secretarial services, and regular return filing

• Dedicated relationship managers and 100% data confidentiality

If you are looking to start a Nidhi Company or need help with ongoing Nidhi regulatory compliance, contact Kyna FinTax for seamless, professional, and affordable service—empowering your financial community with legal certainty and operational ease.