Nidhi Company: A Complete Guide
What is a Nidhi Company?
A Nidhi Company is a type of Non-Banking Financial Company (NBFC) that is formed to promote savings and mutual benefits among its members. It operates by accepting deposits from its members and lending to them for their financial needs.
Unlike other NBFCs, a Nidhi Company cannot deal with non-members and must follow the rules set by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013.
Key Features of a Nidhi Company
Encourages Savings – Helps members develop a habit of saving money.
Borrow & Lend to Members Only – Works only within its registered members.
Simple Registration Process – No RBI approval is required, only MCA registration.
Limited Liability – Members’ personal assets are not at risk.
Low Capital Requirement – Minimum ₹10 lakh capital required.
Requirements to Start a Nidhi Company
To start a Nidhi Company, you must meet these conditions:
Minimum of 7 Members (At least 3 must be directors).
Minimum Paid-up Capital of ₹10 Lakh.
Must use “Nidhi Limited” in the company name.
At least 200 Members within 1 year of incorporation.
Net Owned Funds (NOF) of ₹20 Lakh within 1 year.
75% of the total deposits must be used for lending.
Cannot do business with outsiders – Only members can deposit and borrow
Process to Register a Nidhi Company
✔ Step 1: Obtain DSC & DIN – Digital Signature & Director Identification Number for directors.
✔ Step 2: Name Approval – Apply for name reservation with MCA (should include “Nidhi Limited”).
✔ Step 3: Register with MCA – Submit necessary documents (MOA, AOA, PAN, etc.).
✔ Step 4: Receive Certificate of Incorporation – Your company is now legally registered.
✔ Step 5: Open a Bank Account – For business transactions.
✔ Step 6: Compliance & Reporting – Follow annual filing and regulatory requirements.
Benefits of a Nidhi Company
⭐ Easy to Manage – No complex regulations like other NBFCs.
⭐ Legal Recognition – Operates under government rules.
⭐ Encourages Financial Discipline – Promotes a savings habit.
⭐ No RBI Compliance – Less regulatory burden.
⭐ Tax Benefits – Enjoy tax advantages as per company laws
Things a Nidhi Company Cannot Do
🚫 Cannot deal with non-members.
🚫 Cannot issue preference shares, debentures, or any financial instruments.
🚫 Cannot engage in chit funds, hire purchase, leasing, or insurance.
🚫 Cannot advertise for deposits.
Compliance Requirements for Nidhi Companies
📌 NDH-1 – File within 90 days of incorporation with a list of members.
📌 NDH-2 – Apply for an extension if not meeting 200 members in 1 year.
📌 NDH-3 – Half-yearly return filing.
📌 AOC-4 – Annual financial statement filing.
📌 MGT-7 – Annual return filing with MCA.
📌 ITR-6 – Income tax return filing every year.