Nidhi Company Registration: Process, Documents, Fees & Benefits
Nidhi Company Registration- Online Registration, Fees and Documents
Nidhi Company Registration is essential for establishing a Nidhi company in India, as governed by Section 406 of the Companies Act, 2013, and the Nidhi (Amendment) Rules, 2022. The term “Nidhi” means “savings”, reflecting the company’s primary objective: to encourage savings and provide loans for the collective benefit of its members.
Nidhi companies accept deposits and provide loans, operating under the regulations of the Ministry of Corporate Affairs (MCA), RBI, and other central government rules. Unlike other NBFCs (Non-Banking Financial Companies), Nidhi companies maintain a unique relationship with their members, functioning as independent financial institutions that serve only their member base.
For Nidhi Company Registration in India, read further to learn about eligibility criteria, prerequisites, benefits, required documents, registration procedure, timeline, and applicable fees.
Nidhi Company Registration Benefits
Key Benefits of Nidhi Company Registration
1. Easy & Simple Incorporation:
Nidhi companies operate under the Nidhi Rules and do not require approval from the Reserve Bank of India (RBI). This makes the incorporation process quick and straightforward through the MCA portal.
2. Member-Controlled Operations:
As Nidhi companies are designed for mutual benefit of members, only members have the authority to manage and control the company. Outsiders cannot interfere in its operations or decision-making.
3. Reduced Risk of Loan Defaults:
Nidhi companies encourage credit discipline and thrift habits among members. By providing loans at lower interest rates, they minimize the risk of defaults, making them a safe and reliable option for members.
4. Perpetual Succession:
A Nidhi company is a separate legal entity with perpetual succession. Its legal status remains unaffected by the exit, death, retirement, or insolvency of any member, ensuring continuity of operations until legally dissolved.
5. Flexibility in Functioning:
With limited RBI oversight, Nidhi companies enjoy relaxed operational norms under the Nidhi Rules, 2014, compared to banks and other financial institutions.
6. Lower Interest Rates:
Exemptions provided by the RBI allow Nidhi companies to offer loans at lower interest rates than banks or NBFCs, making them an attractive financing option for members.
7. Minimum Capital Requirement:
The MCA mandates a minimum capital contribution of ₹10 lakh for a proposed Nidhi company, which must be deposited within two months of incorporation. This is considerably lower than the net-owned fund requirements for NBFCs.
Eligibility and Requirements for Nidhi Company Registration
Basic Requirements for Nidhi Company Registration
To register a Nidhi company in India, the following requirements must be fulfilled:
Minimum Shareholders/Members: The company must have at least seven initial members.
Minimum Directors: There must be at least three directors for registration.
Minimum Capital: A minimum capital of ₹10 lakh is required to start the registration process.
Equity Share Capital: Nidhi companies can issue only equity shares and are not allowed to issue preference shares.
Primary Objective: The main objective of a Nidhi company is to promote savings and thrift among members for their collective benefit.
Loan Security: Loans provided by the Nidhi company must be secured in nature.
Company Name: All official documents and publications must include the suffix “Nidhi Limited”.
Restricted Activities for a Nidhi Company
Activities Restricted for Nidhi Companies under Rule 6 of Nidhi Rules, 2014
According to Rule 6 of the Nidhi Rules, 2014, Nidhi companies in India are prohibited from undertaking the following activities:
Partnering or collaborating with outsiders to conduct lending or borrowing operations.
Accepting deposits or providing loans to anyone other than Nidhi members.
Selling assets to members and retaining them as loan collateral.
Engaging in businesses such as chit funds, lotteries, leasing finance, or hire-purchase finance.
Investing funds in or acquiring securities from any other body corporate.
Issuing preference shares, debentures, bonds, or any debt instruments of a similar nature.
Opening current accounts for members.
Entering into corporate arrangements or concessions without approval through a special resolution in the General Meeting and authorization from the Regional Director.
Undertaking business activities outside the scope of lending or borrowing under the Nidhi company’s name.
Promoting or soliciting public deposits in any manner.
Paying brokerage or incentives for loan issuance or arranging funds from members.
These restrictions ensure that Nidhi companies operate solely for the benefit of their members and maintain financial discipline and regulatory compliance.
Nidhi Company Registration Documents Required
Complete List of Documents Required for Nidhi Company Registration
The following documents are required to complete the Nidhi Company registration process:
Documents
- Passport Size Photos
- Aadhar and PAN
- Residence Proof
- Address proof for Registered Business Place
- Rent Agreement/ Lease Documents
- MoA & AoA
Details
- Recent photos of the initial members and directors
- Aadhar and PAN certificate of the members and directors
- Proof of residence of all the initial members and directors including Utility bills, voter ID, or Bank statements not older than two months
- Address proof for the registered place of business for Nidhi Company
- Copy of rent agreement/sale deed or lease documents in case the property has been purchased/leased or rented
- Memorandum of Association (MOA) and Articles of Association (AOA)
Nidhi Company Registration Online Process
Step-by-Step Process for Nidhi Company Registration
Step 1: Decide a Name for the Proposed Company
Begin by selecting at least two potential names for the proposed Nidhi company that reflect its objective of promoting savings and thrift. Ensure the chosen name includes the suffix “Nidhi Ltd.” to comply with the regulations.
Step 2: Prepare the Necessary Documents
Gather and prepare all required documents, including:
Memorandum and Articles of Association (MoA & AoA) aligned with the company’s objectives
Required affidavits
Registered office address proof
Self-attested identity proofs of the initial subscribers and directors
Step 3: Create Login Credentials on the MCA Portal
Register on the Ministry of Corporate Affairs (MCA) portal (https://www.mca.gov.in) by providing your contact details and email address. An OTP will be sent to complete the registration process.
Step 4: Apply for Digital Signature Certificate (DSC)
Log in to the MCA portal and apply for a DSC from a certifying authority. This is required to digitally sign all incorporation forms. Applicable fees must be paid during this process.
Step 5: Fill SPICe+ Form for Incorporation
Part A: Reserve the company name by submitting at least two proposed names reflecting the company’s objectives.
Part B: Complete other incorporation details, including:
Incorporation of the Nidhi company
DIN allotment for up to three directors
PAN and TAN registration
PF and ESI registration
Opening a bank account for the company
Verify all details and documents, affix the digital signature on the SPICe+ form, and submit. A unique reference number (URN) will be generated for tracking.
Step 6: ROC Approval
The Registrar of Companies (ROC) reviews the submitted application. If all documents are complete and in order, the ROC issues the Certificate of Incorporation, containing a unique identification number.
Step 7: Apply for Licence to Operate from the Central Government
After receiving the Certificate of Incorporation, submit an application to the Central Government for a licence to operate. Upon verification and satisfaction of all prerequisites, the licence will be issued, subject to compliance with specified conditions.
Nidhi Company Registration Post Compliances
It is mandatory for a Nidhi company to state in its Memorandum of Association (MoA) that its primary objective is to encourage the habit of savings for the mutual benefit of its members.
Within one year of incorporation, a Nidhi company must ensure the following:
It has at least 200 members and a net-owned fund of ₹20 lakh.
The ratio of net-owned funds to deposits does not fall below 1:20.
At least 10% of the total outstanding deposits are encumbered.
These requirements ensure the company maintains financial stability and operates in the best interest of its members.
Limits on Acceptance of Deposits
Rules for Acceptance of Deposits by a Nidhi Company
A Nidhi company cannot accept deposits exceeding 20 times its Net Owned Assets, as calculated from the latest audited financial statements.
Fixed deposits may be accepted for a minimum period of 6 months and a maximum period of 5 years.
Recurring deposits must have a tenure of at least 1 year and no more than 5 years.
For recurring deposits linked to mortgage loans, the maximum deposit period cannot exceed the repayment tenure of the corresponding loan.
The maximum balance in savings accounts accepted by a Nidhi company cannot exceed ₹1 lakh at any time, with interest rates not exceeding 2% above the rate offered by nationalised banks for savings accounts.
Interest paid on fixed and recurring deposits must not exceed the highest rate allowed by the RBI for NBFCs accepting public deposits.
These regulations ensure that Nidhi companies maintain financial prudence and operate safely within the limits prescribed by law.
Limitation on Loans
Post incorporation of a Nidhi company, it shall not offer loans above the limits prescribed under the Companies Act:
| Total Deposits by the Nidhi Company | Limits for offering loans |
|---|---|
| If the deposit is two crores | Up to 2 lakhs |
| If the deposit is more than two crores but less than 20 crores | Up to 7.50 lakhs |
| If the deposit is more than 20 crores but less than 50 crores | Up to 12 Lakhs |
| If the deposit is more than 50 crores | Up to 15 lakhs |
Limits on Opening of Branches
According to the Nidhi Rules, a Nidhi company can open branches only after earning a net profit for three consecutive years (after tax deduction). Once this condition is met, the company is permitted to open up to three branches within a single district.
Before inaugurating any branch, it is mandatory for the Nidhi company to submit copies of its financial statements and annual returns to the Registrar of Companies within the prescribed timelines.
Nidhi Company Registration Time Involved
Typically, the entire process of incorporating a Nidhi company through the MCA, followed by obtaining a licence to operate from the Central Government, may take approximately 30 to 45 days. Upon completion, the company is officially granted its Nidhi status.
Nidhi Company Registration Fees
The online registration fee for a Nidhi company in India can vary depending on several factors, including:
Stamp duty applicable in the state of registration
Professional assistance for preparing documents or filing the application
Other administrative costs associated with the incorporation process
Typically, the total cost for registering a Nidhi company ranges from ₹9,000 to ₹20,000.
