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Nidhi Company Registration

  • Promotes savings and mutual benefit among members
  • Simple incorporation process under the Companies Act, 2013
  • No RBI approval required (regulated by MCA)
  • Limited liability protection for shareholders
  • Eligible to accept deposits and provide loans only to members
  • Low cost of formation and compliance
  • Ideal for community-based finance and thrift activities
  • Provides limited liability protection safeguarding shareholders’ personal assets.
  • Improves eligibility for tenders, contracts, and institutional opportunities.

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Experience Icon

7 Years

Of Experience

Cases Solved Icon

3622 +

Cases Solved

Awards Gained Icon

10 +

Awards Gained

Trusted Clients Icon

144 k +

Trusted Clients

Queries Solved Icon

36 k+

Queries Solved

Experience Icon

7 Years

Of Experience

Cases Solved Icon

3622 +

Cases Solved

Awards Gained Icon

10 +

Awards Gained

Trusted Clients Icon

144 k +

Trusted Clients

Queries Solved Icon

36 k+

Queries Solved

Experience Icon

7 Years

Of Experience

Cases Solved Icon

3622 +

Cases Solved

Awards Gained Icon

10 +

Awards Gained

Trusted Clients Icon

144 k +

Trusted Clients

Queries Solved Icon

36 k+

Queries Solved

a. Introduction

A Nidhi Company is a type of Non-Banking Financial Company (NBFC) formed under Section 406 of the Companies Act, 2013 and governed by the Nidhi Rules, 2014. Its main objective is to encourage savings and thrift among members and facilitate loans and deposits exclusively between members.
Although classified as an NBFC, a Nidhi Company does not require RBI approval, making it a suitable choice for small-scale financing and savings-oriented business

b. Why You Should Register

  • To operate legally as a member-based financial institution
  • To promote community saving habits and financial self-reliance
  • To enjoy the benefits of a registered legal entity
  • To accept deposits and lend money without RBI licensing
  • To build trust with members, investors, and authorities

c. Compliance and Taxation

  • Governed by the Ministry of Corporate Affairs (MCA) under Nidhi Rules, 2014
  • Must file annual returns and half-yearly returns (NDH-1, NDH-3, AOC-4, MGT-7A)
  • Maintain a Net Owned Fund (NOF) of at least ₹10 lakh
  • Must achieve at least 200 members within one year of incorporation
  • Ratio of Net Owned Funds to Deposits cannot exceed 1:20
  • Maintain unencumbered term deposits of at least 10% of total deposits
  • Taxed as a domestic company at 25% (plus surcharge and cess)

e. When You Should Convert

You may consider converting a Nidhi Company into a Non-Banking Financial Company (NBFC) or Co-operative Society when:
  • You wish to deal with the public (not just members)
  • You plan to expand operations beyond the member network
  • You require a larger funding base or external investors

Documents Required

Documents
  • 1 PAN Card and Aadhaar Card of all directors and shareholders
  • 2 Passport-size photographs
  • 3 Proof of registered office address (electricity bill, rent agreement, and NOC from owner)
  • 4 Digital Signature Certificates (DSC) of directors
  • 5 Director Identification Number (DIN)
  • 6 Memorandum of Association (MOA) and Articles of Association (AOA)
  • 7 Declaration of compliance with Nidhi Rules, 2014
  • 8 Details of members, deposits, and loan structure

For More Information


Visit Us
2nd Floor, Sanali Estate, Abids, , Hyderabad, Telangana , 500001, IN

Advantages and Limitations

Advantages
  • Easy to register and operate
    Easy to register and operate
  • No RBI approval required
    No RBI approval required
  • Limited liability protection
    Limited liability protection
  • Encourages savings and community growth
    Encourages savings and community growth
  • Low compliance compared to NBFCs
    Low compliance compared to NBFCs
Limitations
  • Restricted to member-based transactions only
    Restricted to member-based transactions only
  • Limited scope for business expansion
    Limited scope for business expansion
  • Must maintain 1:20 fund-deposit ratio
    Must maintain 1:20 fund-deposit ratio
  • Cannot issue preference shares or debentures
    Cannot issue preference shares or debentures
  • Subject to strict MCA oversight and audit
    Subject to strict MCA oversight and audit

Comparison

Particulars Nidhi Company NBFC (RBI Registered) NBFC (RBI Registered)
Governing Law Companies Act, 2013 & Nidhi Rules, 2014 RBI Act, 1934 State Co-operative Act
Regulatory Authority MCA RBI Registrar of Societies
Membership Only members Public at large Members
Deposit Acceptance From members only From public From members
Loans To members only To public To members
Liability Limited Limited Unlimited (varies)
Compliance Moderate High Moderate
Audit Requirement Mandatory Mandatory Mandatory
Perpetual Succession Yes Yes Yes
Best Suited For Community savings & lending Large financial institutions Local cooperatives

FAQs

1. What is a Nidhi Company?

A Nidhi Company is a mutual-benefit financial institution that promotes savings and lends only to its members, regulated by MCA under Nidhi Rules, 2014.

2. How many members are required to start a Nidhi Company?
3. Is RBI approval needed to start a Nidhi Company?
4. What is the minimum capital required?
5. Can a Nidhi Company accept deposits from the public?
6. What is the tax rate for a Nidhi Company?
7. Can a Nidhi Company open branches?
8. What happens if the company fails to meet compliance norms?
Is minimum capital required for registration?
Are post-incorporation compliances mandatory?

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