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Nidhi Company


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Nidhi Company registration including Incorporation kit and share certificates.

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Nidhi Company Registration

Nidhi Companies in India are established with the objective of promoting thrift and savings habits among their members. These companies have the unique feature of being allowed to borrow from their members and lend to their members. As a result, the funds collected by a Nidhi company originate solely from its members (shareholders). Nidhi companies play a modest role compared to the banking sector and primarily focus on cultivating a culture of savings within a group of individuals. For more information on starting a Nidhi Company in India, you can also refer to the article "Starting a Nidhi Company" available in the Bmcsindia Learning Center. This article primarily delves into the intricacies of registering a Nidhi Company in India.

Nidhi Company Overview

Nidhi Companies are registered as limited companies engaged in the acceptance of deposits and lending to their members. Although the activities of a Nidhi Company are similar to those of a Non-Banking Financial Company (NBFC), they fall under the purview of the Reserve Bank of India (RBI). However, due to the fact that Nidhi Companies exclusively deal with funds contributed by their shareholder-members, the RBI has granted them exemption from the core provisions of the RBI and other regulations applicable to a traditional NBFC.

Restrictions on Nidhi Company

Under the Nidhi Rules, 2014, Nidhi Companies are subject to various restrictions. As per Rule 6 of the Nidhi Rules, 2014, a Nidhi Company shall NOT:

  • Carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
  • Issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
  • Open any current account with its members;
  • Acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi;
  • Carry on any business other than the business of borrowing or lending in its own name: Provided that Nidhis which have adhered to all the provisions of these rules may provide locker facilities on rent to its members subject to the rental income from such facilities not exceeding twenty per cent of the gross income of the Nidhi at any point of time during a financial year.
  • Accept deposits from or lend to any person, other than its members;
  • Pledge any of the assets lodged by its members as security;
  • Take deposits from or lend money to anybody corporate;
  • Enter into any partnership arrangement in its borrowing or lending activities;
  • Issue or cause to be issued any advertisement in any form for soliciting deposit: Provided that private circulation of the details of fixed deposit Schemes among the members of the Nidhi carrying the words “for private circulation to members only” shall not be considered to be an advertisement for soliciting deposits.
  • Pay any brokerage or incentive for mobilising deposits from members or for the deployment of funds or for granting loans.

Nidhi Company Registration

To initiate the establishment of a Nidhi Company in India, the initial step is to incorporate a Limited Company under the Companies Act, 2013. Therefore, it is necessary to have a minimum of three Directors and seven shareholders to initiate the process of incorporating a Limited Company. During the incorporation of the Nidhi company, it is essential to ensure that the object of the Limited Company, as mentioned in the Memorandum of Association, is focused on cultivating the habit of thrift and savings among its members, receiving deposits from, and lending to, its members exclusively, for their mutual benefit.

“Net Owned Funds” refer to the aggregate of paid-up equity share capital and free reserves, reduced by accumulated losses and intangible assets appearing in the last audited balance s        heet.

If a Nidhi Company meets the conditions required for operating as a Nidhi Company, it must, within ninety days from the close of the first financial year after its incorporation (and where applicable, the second financial year), file a return of statutory compliances in Form NDH-1. This return should be duly certified by a practicing Chartered Accountant (CA), Company Secretary (CS), or Cost and Works Accountant (CWA), along with the requisite fees.

In cases where the Nidhi Company is unable to meet the requirements for operating as a Nidhi Company within one year from the commencement, the company may apply to the Regional Director within thirty days from the close of the first financial year for an extension of time, as specified in Form NDH-2.

If, even after the second financial year, the Nidhi Company still cannot meet the requirements for operating as a Nidhi Company, it is prohibited from accepting further deposits from the commencement of the second financial year until it complies with the provisions for operating as a Nidhi Company. Failure to comply with these provisions may result in penal consequences.

Nidhi Amendment Rules

As per a notification from the Ministry of Corporate Affairs on 3rd February 2020, an amendment to the existing rules was released. Nidhi companies and their stakeholders are advised to use the revised and latest forms. These forms include:

Proprietorship vs Limited Liability Partnership (LLP) vs Company

DefinitionUnregistered type of business entity managed by one single personA formal agreement between two or more parties to manage and operate a businessA Limited Liability Partnership is a hybrid combination having features similar to a partnership firm and liabilities similar to a company.Registered type of entity with limited liability to the owners and shareholders
OwnershipSole Ownership

Min 2 Partners

Max 50 Partners

Designated Partners

Min 2 Directors

Min 2 Shareholders

Max 15 Directors

Max 200 Shareholders

For One Person Company

1 Director

1 Nominee Director

Registration Time7-9 working days
Promoter LiabilityUnlimited LiabilityLimited Liability


GST Registration

Partnership Deed

LLP Deed

Incorporation Certificate



Incorporation Certificate

GovernanceUnder Partnership ActLLP Act, 2008Under Companies Act,2013
TransferabilityNon TransferableTransferable if registered under ROFTransferable
Compliance RequirementsIncome tax filing if turnover is more than Rs.2.5 lakhsITR 5

Form 11

Form 8



MCA filing


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