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Nidhi Company Registration


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Nidhi Company Registration

Rising prices and low purchasing capacity have always been a matter of concern for the middle and small income groups. Their financial burden somehow made savings impossible for them. Though, with the creation of Nidhi Company, they too become capable of savings and investing. Nidhi Company Registration acts as a saviour for middle and low-level income groups.

Most of the investment companies in India cater to a large amount of money, whereas banks provide very little scope for growth in savings. Nidhi Company here provides the most effective and easy way to save your money with a wide scope of monetary growth.

What is Nidhi Company?

Nidhi Company is also known as Mutual Benefit Finance Company which is a type of Non-Banking Financial Company. It works on the principle of mutual benefits that are regulated by the Ministry of Corporate Affairs. Its major functions include lending and borrowing money.

The incorporation of a Nidhi Company is done on the basis of the rules of Companies Act 2013. It is mandatory for a Nidhi Company to be incorporated as a 'Limited Company'. That is to say; it requires a minimum number of three directors and seven shareholders to form a Nidhi Company. Make sure to mention that the objectives and functions of a Nidhi Company Registration is to cultivate the habit of savings amongst its members, receiving deposits from, and lending money to its members only, in the Memorandum of Association at the time of incorporation.


Main Features of Nidhi Company Registration
  • Promotes the habit of saving amongst low and middle- income groups.
  • They accept term deposits for duly returns
  • Easy and flexible loans as compared to traditional banks
  • Secured investments
  • Minimum documentation and formalities for taking a loan

Nidhi Company Registration provides loan and deposit to its members only. Nidhi Company plays a crucial role in the financial growth of middle and lower-middle-income group by providing them with financial services with minimum formalities. For low-income people, Nidhi Company is an attractive source of investment. No external body is allowed in the decision-making process of a Nidhi Company. It is not governed by any committees or trusts. It is maintained and controlled by its members only. In fact, a Nidhi Company does not need the approval of Reserve Bank of India before sanctioning loan to its members.


What activities are prohibited for the Nidhi Company?

As far as Nidhi companies are involved in a non-banking financial transaction, they are prohibited from performing the following activities:

  • Advertise themselves for deposits
  • Chit funds
  • Lotteries
  • Insurance
  • Leasing Finance
  • Hire-Purchase finances
  • Sell the assets of its members and keep it as a security for providing loans
  • Entering into a partnership firm for carrying out lending and borrowing activities
  • Accepting deposits or lending funds to the outsiders

What are the Benefits of Nidhi Company Registration?


  • Fulfils the needs of middle and Low-Income Groups
  • Investments made in Nidhi Company plays an important role in fulfilling the needs of middle and low -income groups by providing them financial help with minimum documentation and formalities

  • Loans with Minimum Eligibility Criteria
  • It is quite impossible for the small wage earners to obtain loans from traditional banks. For them, Nidhi company Registration is the only way to obtain loans with minimum eligibility criteria.

  • No External Involvement
  • Nidhi Company takes funds from its members and further sanction loan to its members which mean there is no external involvement in the working process of a Nidhi Company. The investors/members themselves are the governing bodies in the company.

  • Limited Liability
  • The directors and managers of the company are benefitted with limited liabilities as their personal assets remain protected and cannot be used to clear the debt of the company.

  • Perpetual Successions
  • Nidhi Company has never-ending existence as it cannot be dissolved by the death, retirement, insanity or insolvency of any of its members or shareholders. Moreover, none of the members is liable for the wrong deeds of other members.

  • Better Credibility
  • Nidhi Companies are regulated by the Ministry of corporate affairs and hence is considered more trustworthy and credible than the other institutions regulated by the state government.

  • Separate Entity
  • Nidhi Company is a separate entity that can acquire a property and incur debts on its own name.

Minimum Requirements for Nidhi Company Registration


Before Incorporation

Minimum Shareholders: 7

Minimum Directors: 3

Minimum Capital Income: Rs 10 lakhs

Director’s Identification Number (DIN) of all the designated directors

After Incorporation

Minimum Shareholders: 200

Minimum Net Owned fund Limit: Rs 10 lakhs

Minimum Net owned fund to deposits ratio: >1:20

Unencumbered deposits should not be less than 10% of outstanding deposits.

What are the documents Required for Nidhi Company Registration?


Here is a full list of documents you will require to incorporate a Nidhi Company in India:
  • Id Proof of all the designated Directors and Shareholders
  • PAN Card of all the directors
  • Address Proof of all the Directors/Shareholders
  • Residential Proof
  • NOC/ Rent Agreement in case of Rented Property.
  • Passport Size Photographs of all the Directors
  • Aadhar Card of all the Directors

PAN Card: It is mandatory for all the directors to submit a copy of their PAN card. It is a unique identification number provided by the Income-tax department to the taxpayers in India. Indian nationals have to submit their PAN card during the registration process.

Address Proof: all the designated directors have to submit their address proof. The proof should have name and address of the director as mentioned in his PAN card. Make sure that the address proof is not older than two months.


Following Documents can be submitted as an Address Proof:
  • Ration Card
  • Aadhar Card
  • Voter Card
  • Passport
  • Driving License
  • Any utility bill such as telephone, electricity, etc.

Residential proof of the designated property: residential proof of the forming company has to be submitted during incorporation. In case the property is rented, a rent agreement along with the NOC from the owner is required. NOC is a statement that says the owner has no objection in establishing a company at his place.


Following documents can be submitted as the residential proof:
  • Any Utility Bill such as electricity, telephone, etc.
  • Rent Agreement
  • No Objection Certificate

Passport Size Photograph: Passport size photograph of all the directors is required at the time of registration.

What is the Procedure for Nidhi Company Registration ?


Nidhi company Registration is done as a Public Limited Company as per the provisions of Company Act, 2013. So, you have to follow the given steps to get Nidhi Company Registered in India:

  • Obtain DSC (Digital Signature Certificate) and DIN
  • The first step is to obtain DSC of the designated directors of the company. DSC is used to sign the entire document electronically and hence is called Digital Signature Certificate while DIN is issued by the Ministry of corporate affairs and is referred to as the Director's Identification Number. DIN can be obtained directly by filing incorporation form. If you already have DSC and DIN, you can skip this step and move ahead to next.

  • RUN Name Approval
  • Next step is to select an appropriate name for your Nidhi Company and get it approved by the MCA. The name should be unique and should not resemble any other registered company. Moreover, the name of your company is the first impression of your work and objective that helps to attract more and more shareholders. Make it relevant, attractive, and of course, suggestive. Make sure it's not offensive or illegal.

    An pplicant can provide 3 names to MCA out of which MCA will select one. You can search whether the name is unique or not by the free search name facility available at MCA portal.

  • Submission of Memorandum of Association (MOA) and Article of Association (AOA)
  • Once name approval has been done, you have to submit MOA and AAO to the Ministry of Corporate Affairs along with the subscription statement. All the objectives of your organization must be clearly stated in your statement.

  • Issuance of Certificate of Incorporation
  • Submit all the documents along with the SPICe form to get Incorporation certificate. All the documents are checked by the authorities, and if all goes well, they will issue you the certificate.

    Note: It usually takes around 15-25 days to complete the incorporation procedure. Incorporation certificate works as proof that the company has been created and contains CIN, i.e. Corporate Identification Number.

Post Nidhi Company Incorporation Compliances


The process is not over yet. Here are the post-incorporation compliances you need to follow:

  • Apply for PAN
  • Once you have got your incorporation certificate, you can apply for your company's PAN number to carry out all the finance-related activities.

  • Open Company’s Bank Account
  • After making PAN, you are now applicable to open a bank account in your company’s name and use it for all the transactions. Incorporation certificate, Memorandum of Association, Article of Association along with PAN are required to open a bank account.