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NIDHI Company Registration

We, at SetIndiaBiz assist Public Companies in acquiring the status of a NIDHI Company, through our quick, simple, and 100% online services of Nidhi registration process, available to you at the most affordable prices. You can subscribe to our all inclusive package of NIDHI Company registration, and our legal experts will guide & assist you through the entire process of registration.
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Nidhi Company Registration

A Nidhi company is essentially a non-banking financial company that is involved in accepting deposits from and lending money to their members. Only Public Companies are permitted to obtain the status of a NIDHI company after fulfilling certain conditions prescribed in the NIDHI Rules, 2014. Here, at SetIndiaBiz, we provide end-to-end services of NIDHI company formation, beginning from online NIDHI Company registration, to acquisition of the NIDHI Company status. We have a dedicated team of paralegal experts to assist throughout the process of registration, documentation, legal draftings, and mandatory filings for NIDHI Companies.

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Nidhi Company Registration Online in India

A Nidhi company is effectively a Non-banking Financial Company or NBFC which accepts monetary deposits from its members and lends them money against tangible collaterals like gold, property mortgage, etc. Rule 3(1)(da) of the Nidhi Rules, 2014, drafted in pursuance of Sections 406 and 469 of the Companies Act, 2013, defines a Nidhi Company, as a company which has been incorporated with the primary object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to its members for their mutual benefits. While the company itself is regulated by the Ministry of Corporate Affairs, its deposit taking activities are regulated by the Reserve Bank of India.
Nidhi Company Registration

What are the key decisions to be taken before starting a NIDHI Company?

Checklist to Register Nidhi Company
A Nidhi company is registered as a Public Limited Company and hence the minimum requirements to set it up is almost similar to that of a Public Limited Company, especially regarding the number of shareholders, directors, and name of the company. The only difference here relates to the primary business activity of the Nidhi company, which is fixed to accepting deposits and lending money to its members only. Given below is an elaborate list that must be checked before Nidhi Company registration in India.

Checklist to Register a NIDHI Company Registration in India

At least 7 shareholders

At least 3 directors

A unique name that ends with the words “Nidhi Limited”

A registered business address

Minimum paid up equity share capital of Rs.5 lakhs

A Memorandum of Association containing the object of the Nidhi company as accepting deposits and lending money to its members for their mutual benefits.

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Stepwise procedure for NIDHI company formation

For NIDHI Company formation, you must first incorporate your business as a public limited company and then apply for obtaining the NIDHI Company license within the prescribed time period under the NIDHI Rules, 2014. The detailed stepwise procedure for Nidhi Company registration has been mentioned below.
STEP 1 – Documentation
You must produce certain prescribed legal documents in order to apply for the NIDHI Company Registration. A detailed list of every single one of these documents has been given below. You must make sure you have all of the required documents before even starting the process of NIDHI company registration, and if you don’t, you must make arrangements for the missing documents as soon as possible.
STEP 2 – Name selection
A NIDHI Limited Company’s name needs to be distinctive and one that conveys its brand and business objective aptly. Additionally, a set of conditions that must be met while naming a NIDHI company have been laid out in the Companies Act, the Company (Incorporation) Rules, the Trademark Act, and the Names and Emblems. The name of a NIDHI Company cannot be  same as or similar to the name of an already-existing company, LLP, an applied or a registered trademark. Read our article on requirements for name approval for a further explanation.
STEP 3 – Name Approval
Once you’ve decided on a legit name for the NIDHI company, you must reserve it with the Registrar of Companies in order to stop other companies from using it without your permission or stealing it. All you have to do is avail of our name approval and reservation services, after which we shall check the eligibility of the names you have suggested and submit an application to reserve it, either in the RUN (Reserve Unique Name) or PART A of the SPICe+ application.
STEP 4 – Application for Incorporation
After approving the name of a Nidhi Limited Company, you can proceed with its incorporation. To apply for the incorporation of a NIDHI company, you are required to fill out the online SPICe+ application available on the official website of MCA. The application is divided into two parts- PART A for the name reservation and PART B for NIDHI company incorporation. The application is filled out and signed by any one director of the company, and submitted to the ROC along with the prescribed set of documents attached with it.
STEP 5 – Issue of Certificate of Incorporation
The ROC, after receiving the application for NIDHI Company incorporation, verifies all the details and documents furnished in it. Only after the ROC is satisfied with the authenticity of such details and documents, he shall register the NIDHI Limited Company, and issue a Certificate of Incorporation to the NIDHI company as a conclusive proof of its registration. Additionally, the ROC also allots a Corporate Identification Number as the unique identity of the NIDHI company.
STEP 6 – Obtain NIDHI Company license
Post-incorporation, a company must file an application for obtaining the NIDHI Company license after fulfilling a set of conditions regarding its number of members , net funds, term deposits, etc, as prescribed in the Companies Act, 2013. Check out the detailed list of such conditions here. The application must be filed in form NDH 4 to the Central Government within 4 months from the date of incorporation of the NIDHI Limited Company or within such extension period as permitted by the Regional Director. After being satisfied that the NIDHI company has fulfilled all the prescribed conditions, the Government shall grant it the NIDHI Company license to NIDHI company and notify the same in the official gazette.

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Documents to Register NIDHI Company

A NIDHI company can obtain the NIDHI Company license only after getting incorporated as a NIDHI Limited Company in India. To register a NIDHI Limited Company, the applicant must file the all inclusive SPICe+ application along with the prescribed documents attached with it in the digital format. The list of all such documents required to incorporate a Public Limited company looking forward to obtain the NIDHI Company license, has been mentioned in the table below.
Documents of the Members
  1. Coloured photographs of all members / promoters
  2. PAN card of all members / promoters
  3. dentity proofs of all members / promoters
    1. Voter ID
    2. Driving License
    3. Passport
    4. Aadhar Card
  4. Address proofs of all members / promoters
    1. Electricity Bill
    2. Telephone Bill
    3. Gas Bill
    4. Water bill
    5. Bank Statement not older than 2 months
Documents of the Premises
  1. Address proofs
    1. Electricity Bill
    2. Telephone Bill
    3. Water bill
    4. Gas Bill not older than 2 months
  2. No Objection Certificate from the owner of the premises
  3. Stamped and notarised rent agreement / copy of property documents
Legal Drafts
  1. Questionnaire For Company Registration
  2. Consent of Directors in Form DIR-2
  3. Specimen Signature of Directors
  4. Signed Subscriber Sheet

Frequently Asked Questions

Only businesses incorporated as public limited companies are permitted to obtain the NIDHI company license after a year from the date of its incorporation, provided it fulfills the following conditions:
  1. Has at least 200 members within one year from the date of incorporation
  2. Has a minimum Net Owned Funds of Rs.20 lakhs
  3. Has unencumbered term deposits of at least 10% of the outstanding deposits as specified in Rule 14 of NIDHI Rules, 2014
  4. Net owned funds to deposit ratio is not more than 1:20

After a NIDHI limited company has filed the NDH-4 application to obtain the NIDHI Company license, the Central Government must either approve or reject it within 45 days from the date of filing of application. If it fails to do so, the pending application shall be considered as approved after the expiry of 45 days.

No, a NIDHI Company cannot issue preference shares according to NIDHI Rules, 2014. If a NIDHI Company has issued preference shares before the introduction of the NIDHI Rules, 2014 or the Companies Act, 2013, such shares shall be redeemed in accordance with the terms of issue of such shares.
A NIDHI Company shall not carry on business of chit funds, hire purchase finance, leasing finance, insurance, any other business except that of borrowing and lending in its own name.
No, a NIDHI Company cannot acquire another company by purchase of securities, unless a special resolution to the effect has been passed in the General Meeting of its shareholders of the NIDHI company, and a prior approval regarding the same has been granted by the Regional Director which has jurisdiction over the NIDHI Company.
No, a NIDHI Company cannot accept deposits or lend money to any individual other than its members.
The following entities cannot become a member of a NIDHI Company:
  1. A body corporate
  2. A trust
  3. A minor
A NIDHI Company may accept deposits in the name of a minor, only if the deposits are made by the natural or legal guardian of the minor.
A NIDHI Company may open branch offices, only if it has earned net profits after tax, continuously during the preceding financial years. A NIDHI Company can open a maximum of three branches within the district it is located in. If it proposes to open more than three branches within the district, or a branch outside the district, it must seek a prior approval from the regional director who has jurisdiction over the company. Note that no NIDHI Company can open branches outside the state where its registered address is located.
A NIDHI Company can grant loans against the following securities:
  1. Gold, Silver, Jewelleries, where the repayment period does not exceed 1 year
  2. Immovable property, where the repayment period does not exceed 7 years
  3. Fixed Deposit receipts, National Savings Certificates, other Government securities
  4. Insurance Policies
Under Rule 18 of the NIDHI Rules, 2014, a NIDHI Company shall not declare dividend exceeding 25% or such higher amount of the total income as prescribed by the Regional Director. Further the declaration of dividend must be made subject to the fulfillment of the following conditions:
  1. An equal amount is transferred to the General Reserve of the company
  2. there has been no default in repayment of matured deposits and interests
  3. It has complied with all the rules as applicable to NIDHI companies
Yes, it is mandatory for NIDHI companies to appoint an auditor under the Companies Act, 2013. However, it must be noted that a NIDHI company shall not appoint or re-appoint an individual as auditor for more than one term of 5 consecutive years, and shall not appoint or reappoint an audit firm as an auditor for more than two terms of five consecutive years each.
A NIDHI Company can open the following types of accounts:
  1. Fixed Deposit accounts
  2. Recurring deposit accounts,
  3. Savings Account
Note that a NIDHI Company cannot open a current account in the name of its members.
Yes, a director can be a member of a NIDHI company unconditionally.
The auditor of a NIDHI Company shall furnish a Certificate every financial year to the effect that the company has complied with all the provisions contained in the NIDHI Rules, 2014.