Nidhi Company Registration

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What's a Nidhi Company?

A Nidhi company is an affordable and hassle-free way of starting a company in India which offers loans to its members. It's registered under the Companies Act, 2013, with the objective of encouraging savings amongst its members.

A Nidhi company can be registered with a minimum of three members, and the registered company will have the words “Nidhi Limited” as part of its last name. All members registered with the company can lend and borrow money amongst themselves. The principal source of funds is the contribution from members. Loans are given to members at relatively reasonable rates for purposes such as house construction or repairs and are generally secured.

A Nidhi company is incorporated as a public company. It's categorized as a Non-Banking Financial Company (NBFC) and doesn't require a Reserve Bank approval or license.

The financial transactions and dealings of a Nidhi company are regulated by the Ministry of Corporate Affairs. Although an RBI license isn't needed to start a Nidhi company, the RBI is empowered to issue directives or seek clarifications about any activities related to deposit acceptance by the Nidhi company.

Nidhi companies are also known as Nidhi, Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company.

Benefits of a Nidhi Company

Starting a Nidhi company offers the following benefits:

  • Low interest rates and secured investments - A member can borrow money at a low interest rate which is usually lesser than bank interest rates. Your investments are secure as all financial dealings of the company are transparent and accessible to all registered members.
  • Ease of formation and minimal registration formalities – The supporting documentation and governmental formalities to be completed for registration are minimal and take significantly lesser amount of time.
  • Uninterrupted Existence - A Nidhi company, being a separate legal entity is not affected by the death or exit of any member and continues to remain in existence irrespective of the changes in its membership.
  • Higher Credibility – A Nidhi company enjoys better credibility when compared to other mutual benefit organizations. Nidhi companies are monitored by the Central government whereas other mutual benefit organizations fall under the purview of the respective state government.
  • Limited Regulations and Capital Requirements – The regulations imposed on the dealings of a Nidhi company are limited, as these companies transact with funds only amongst its own members. The amount of investment required to setup a Nidhi company is also lesser compared to other similar financial entities.

Minimum requirements and Timelines

Before Incorporation

The minimum requirements prior to incorporation are as follows :

  • Minimum 7 shareholders
  • Minimum 3 Directors
  • Minimum Capital of Rs. 5 lakhs
  • Director Identification Number (DIN) for all directors
  • The company is registered as a public company
  • Preferential shares cannot be issued
  • The registered company carries the words 'Nidhi Limited' as its last name

After Incorporation

Every company should ensure the following within 1-year :

  • Not less than 200 members
  • Net Owned Funds of 10 lakh rupees or more
  • Unencumbered term deposits of not less than 10% of the outstanding deposits
  • Ratio of Net Owned Funds to deposits shouldn't exceed 1:20

Timelines for Incorporation

The table below lists the general timelines to setup a Nidhi company :

Activity Time Required
Obtaining DSC & DIN 5-7 days
Name Approval 3-5 days
MOA and AOA Approval 3-5 days
Registration and Incorporation Certificate Up to 14-days
Online filing for PAN/TAN/Bank Account 3-5 days

* All days listed above are working days. The overall process to start and register a Nidhi company can take anywhere between 30-45 business days. This is subject to all your documents being in order and the processing time by the respective government approval bodies.

Document Requirements

The following documents need to be submitted for Nidhi approval:

  • Identity and Address Proof – ID and Address proof needs to be submitted or all Directors and Shareholders of the company, along with PAN. Address proof documents should be less than 2 months old.
  • Proof of Registered Office in India – Rental Agreement/Sale Deed along with copies of recent property tax receipt or water bill must be submitted.
  • Signed Incorporation Documents – Hard copy of signed application documents and soft copies of other signed documents uploaded to the registration portal.
  • Digital Signature (DSC)
  • Director Identification Number (DIN) of the directors
  • Passport size photographs of directors
  • Landlord No Objection Certificate, if the office premises are rented.
  • Memorandum of Association of the company (MoA)
  • Articles of Association of the company (AoA)
  • You will also need to fill and submit forms INC 9 and DIR 2

Nidhi Compliance

In addition to registration and setting up your company, you will also need to submit the following forms as prescribed to ensure strong financial health and standing for your Nidhi company :

  • NDH-1 – This is a yearly statement that needs to be filed with details of the company's operations. Non-compliance in filing this could cause the loss of Nidhi status of your company.
  • NDH-3 - This is a half-yearly return filed to ensure that the Nidhi company is compliant with all the rules. This needs to be typically submitted by the end of March and September each year.
  • AOC-4 – This form is used for filing financial statement and other documents.
  • MGT-7 – This form is used for filing Annual Return by Companies that show a share capital.

Choosing a name for your Nidhi Company

Choose a name which is:

  • Short, meaningful, and relevant to your company's overall mission.
  • Not the same or identical to an existing LLP or company or trademark.
  • Respectful and does not violate any existing laws or religion.


As a Nidhi company, there are certain operations that are disallowed:

  • A Nidhi company cannot operate businesses like Chit funds, Hire purchase finance, Vehicle finance, or insurance.
  • Acceptance and lending of funds are strictly restricted within members only.
  • A Nidhi company is not allowed to add a corporate body like a private company as its member. Nor is it allowed to accept funds from such organizations.
  • A Nidhi company cannot charge service charges or brokerage fees for granting loans to its registered members.
  • A Nidhi company cannot expand its operations beyond the state in the Indian union its registered with thereof. To expand its operations, a new Nidhi company will need to be setup by following the standard rules and procedures in the desired state of operations expansion.
  • A Nidhi company cannot issue any advertisements for soliciting deposits in any form.

Benefits of using India Tax Help for Registration

We have plenty of experience in registering Nidhi companies. We will assign one of our experienced experts to guide you through the entire process step-by-step to ensure that your company is setup as smoothly as possible. We will also take care of all the paperwork and submittals once you share all the relevant documents with us. You can reach us via phone/e-mail to receive instant status updates regarding your application.

India Tax Help makes the entire process simple and hassle-free and ensures that your Nidhi company is incorporated within 35 business days, subject to government approval.

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