NIDHI COMPANY REGISTRATION

A Nidhi Company is a type of Non-Banking Financial Company (NBFC) formed to cultivate the habit of savings among members and to provide loans to its members only. It operates under the Companies Act, 2013, and is governed by the Nidhi Rules, 2014. Nidhi Companies are also known as Mutual Benefit Societies.

1.Key Features of a Nidhi Company

• Formed only for mutual benefit of members.
• Deals in accepting deposits and lending to members only.
• Cannot engage in chit fund, hire purchase, leasing, insurance, or securities business.
• Must have “NIDHI LIMITED” as part of its name.
• No RBI approval required, but RBI has regulatory powers for deposit acceptance.

2.Basic Requirements

• Minimum 7 Members
• Minimum 3 Directors
• Minimum Paid-up Capital: ₹5 Lakh
• Registered Office Address
• Must become compliant with Nidhi Rules within 1 year of incorporation.

Post-Incorporation Requirements (Within 1 Year)

A Nidhi Company must achieve:

• Minimum 200 Members
• Net Owned Funds (NOF): Minimum ₹10 Lakh
• NOF to Deposit Ratio: Not more than 1:20
• Unencumbered Term Deposits: Minimum 10% of total deposits

4.Activities Allowed

• Accepting deposits from members
• Providing secured loans to members
• Encouraging savings among members

Loans can be given against:

• Gold
• Silver
• Property
• Fixed Deposit receipts
• Government securities

5.Prohibited Activities

A Nidhi Company cannot:

• Conduct chit funds
• Provide microfinance loans
• Engage in hire-purchase or leasing
• Issue preference shares, debentures, or debt instruments
• Open branches without meeting Rule 10 requirements
• Do business with non-members
• Advertise for deposits

6.Documents Required for Registration

For Directors & Members

• PAN Card
• Aadhaar / Voter Card / Passport
• Address Proof (Electricity Bill, Bank Statement)
• Passport-sized photos

For Registered Office

• Electricity bill / Rent agreement
• NOC from owner

Legal Documents

• MOA & AOA of the company
• DIR-2 (consent of directors)

7.Registration Process (Step-by-Step)

1. Step 1: Obtain DSC
   Digital Signature Certificate for all proposed directors.
2. Step 2: Apply for DIN
   Director Identification Number through MCA.
3. Step 3: Name Reservation
   Apply through RUN service on MCA portal.
   Name must include NIDHI LIMITED.
4. Step 4: Filing Incorporation Forms
   Documents filed via SPICe+ (INC-32) form:
   • SPICe+ Part A: Name approval
   • SPICe+ Part B: Incorporation form
   • e-MOA (INC-33) and e-AOA (INC-34)
   • AGILE-PRO for GST, EPFO, ESIC
5. Step 5: Certificate of Incorporation
   Issued by MCA after verification.
6. Step 6: Commencement of Business
   Submit INC-20A within 180 days.

8.Post-Incorporation Compliance

• Maintain statutory registers
• File annual returns (MGT-7)
• File financial statements (AOC-4)
• Conduct regular board meetings
• Submit NDH-1, NDH-2, and NDH-3 forms as per Nidhi Rules
• Ensure compliance with deposit and member rules

Advantages of a Nidhi Company

• Easy and low-cost formation
• No RBI approval required
• Ideal for small lending/savings groups
• Limited liability protection
• Supports financial inclusion
• Promotes habitual saving among members

Limitations

• Cannot do business with non-members
• Not allowed to operate like a full NBFC
• Strict internal compliance
• Restricted loan types