Facebook Instagram Linkedin Twitter Youtube Envelope Whatsapp
Get a Quote
Login

Nidhi Company Registration

Ideal for borrowing and lending among family and friends
(Takes 30-40 days)

Nidhi Registration Online

Name(Required)

About Nidhi Company

A corporation is referred to as a "Nidhi company" if it only manages "deposits from and loans to" its members (shareholders) and acts in their best interests. As a result, a "Nidhi Company" has been granted some exemptions with regard to annual compliances and tax assessment.
The Companies (Nidhi Companies) Rules of 2014, Chapter XXVI of the Companies Rules of 2014, and Section 406 of the revised "Companies Act, 2013" govern the formation, administration, and control of Nidhi Companies in India.
A Nidhi Company's incorporation is intended to promote savings among its participants. Only members of Nidhi firms are permitted to "deposit from and lend to" them. In the end, the assets that are added to a Nidhi firm come specifically from its members and are to be used exclusively by the Nidhi firm's investors. The word "Nidhi" in Nidhi Company means "treasure" and has Hindi linguistic roots.
A particular type of NBFC is the Nidhi Company. Despite not being directly controlled by the RBI, it nonetheless has the authority to provide them instructions regarding their deposit acceptance activities. Additionally, these "Nidhi companies" are free from the RBI Act's basic rules as well as additional NBFC-specific directives because they exclusively interact with their members (shareholders). As a result, a Nidhi Company is the ideal legal entity to accept a "deposit from and loan to" a certain group of members.

Nidhi Company Registration

All the provisions pertaining to the formation and management of a Nidhi Company in India are covered under Section 406 of the "Companies Act, 2013" and the Companies (Nidhi Companies) Rules of 2014. The RBI also provides guidelines and norms for the Nidhi Companies. These are mostly connected to financial operations and investments made by businesses, especially NBFCs.
Loans made through a Nidhi Company have very reasonable interest rates. The advances are, in a sense, made against security. When compared to deposits in the organised banking industry, Nidhi deposits do not yield as much interest. The Nidhi Companies' only lenders and only borrowers are its members. As a result, these organisations also make reference to Mutual Benefit Societies. A Nidhi Company is the finest option if you want to start a business in India that deals with finance or advances.

Documents Required

  • Passport Sized photographs of all the directors.
  • ID proof of all the designated directors and shareholders. (PAN card and Passport are valid).
  • Address proof of all the directors and members (Ration Card, Aadhaar Card, Passport, Voter ID, and Utility Bill – electricity/water/mobile).
  • Address Proof of the Company. Make sure that the address proof is not older than 2 months.
  • Copy of the Property papers (if the property is owned).
  • NOC (No-Objection-Certificate) from the owner (if the property is rented).

Benefits of Starting a Nidhi Company

The fundamental reason for establishing a Nidhi Company is to encourage its members to preserve money so they may readily meet any financial needs that may occasionally arise. Being frugal makes them independent and able to cover any additional costs. The benefits of having a firm classified as Nidhi don't stop here, either.

The creation of a Nidhi Company has several positive advantages. Here are a few examples:

  • Liability is Limited: A Nidhi Company's directors' and investors' liability is restricted. There is no threat of banks, creditors, or the government seizing the personal assets of any of the Directors or members.
  • Less regulation: The Nidhi Rules, 2014 govern the administration of Nidhi organisations. The guiding power is the central government, which has complete control over all of its activities. The RBI rarely enforces numerous regulations against a Nidhi firm.
  • Nidhi businesses have greater credibility than some other member-based organisations, such as "Trusts, Cooperative Societies, or NGOs."
  • Better Option for Savings: A Nidhi Company's incorporation is primarily intended to promote the habit of saving among its members (shareholders). The other objective of being mutually helpful is accomplished in this way. The Nidhi Companies are limited to borrowing and lending money from their owners and members.
  • Easy Access to Public Funds: The Nidhi Company's loans have a lower interest rate than those offered by banks and other NBFCs.
  • Tax advantages: Section 8 companies are eligible for a number of tax advantages in India.
  • Micro Banking: Nidhi businesses provide banking services to India's rural and outlying populations, who are still found in far-off places.
  • Better Credit Co-operative Society: A Nidhi Company is a close-by replacement for a credit cooperative society. Better Credit Co-operative Society. Additionally, tiny financiers are favouring it more and more. The members of a Nidhi organisation can take advantage of a large range of benefits associated with credit cooperative societies.
  • Simple Processing: Managing banks, where the procedure is general and inflexible, is significantly more complicated than borrowing from and lending to known individuals.
  • Easy Registration: Enrolling a Nidhi Company with Sahyog is a very simple and transparent process. You are not required to obtain any RBI permits. Simply register your organisation with the MCA as an open constrained.
  • One Regulatory Body: Nidhi Companies are now governed by the Nidhi Company Rules, 2014, according to the 2013 Amendment to the Companies Act.
  • Low Capital Requirement: According to a Ministry of Corporate Affairs (MCA) rule, a Nidhi firm must have base capital of Rs. 5 lakhs. Additionally, the capital must be raised to a minimum of Rs. 10 lakhs within a year. The "Fees, DIN, DSC & Other Expenses" range from 25 to 30,000 rupees. These fees from the government, which vary from state to state.
  • Nidhi Companies play a crucial role in meeting the requirements of lower and middle-income groups by providing them with financial help without the need for extensive paperwork or formality.
  • Easier Eligibility: Due to traditional banks' strict eligibility requirements, people earning minimum wage and others from lower socioeconomic strata sometimes cannot obtain loans from them. Because there are fewer requirements, a Nidhi Company is an excellent choice for them to get financing.
  • No Outside Intervention: Nidhi Companies gather assets from their members and then lend those members money. In this sense, there is no outside factor affecting the work of these organisations. The organization's tasks are managed by its financial members.
  • A Nidhi Company is a separate legal organisation that is capable of making purchases and incurring obligations in its own name.

What is included in Our Nidhi Company Registration Package

DIN for 3 Directors

Digital Signature For 3 Directors

Name search & approval

MOA/AOA

Registration Fees

Company Pan Card

Key Features

It's important to remember a few things regarding how Nidhi Companies operate in India, as stated in Rule 6 of the Nidhi Rules of 2014:

  • No exchange involving "chit funds, leasing finance, insurance, or the acquisition of securities" issued by any corporation is permitted.
  • It cannot accept deposits from or make advances to a third party.
  • In no structure is a Nidhi Company required to provide "inclination offers, debentures, or any other obligation instruments."
  • The administering bodies, which only regulate the operations of a Nidhi Company in India, are the Companies Act of 2013 and the Nidhi Rules of 2014.
  • The Nidhi Company is not governed by the RBI.
  • It is not intended to do microfinance or auto fund operations in India.
  • The number of members must reach 200 within a year of registration.
  • The declining balance method can only be used to compute interest rates up to a maximum of 20% per year.
  • Savings deposit account interest rates may not be increased by more than 2% over those provided by Nationalised Banks.
  • FD, RD, and reserve monies may be acknowledged by a Nidhi Company. As of right now, it can also yield 12.5% interest.
  • The maximum rate of interest set by the RBI for NBFCs to give on deposits cannot be exceeded by the rate of interest that can be offered on Fixed and Recurring Deposits. The Nidhi firms are also subject to the NBFCs' maximum interest cap.
  • For the first three years, activities are limited to a regional scale. After three years have passed, three offices may be erected nearby. An earlier approval from the Regulator Director is necessary for development outside of the region.
  • It is limited to lending against securities. It is possible that these securities include "gold, property, fixed deposits, government securities, or life insurance certificates."
  • Deposits that aren't being used as securities for whatever reason, or unencumbered deposits, should make up at least 10% of total deposits.
  • The best-possible filing of "Audit, Tax Returns, and Annual Accounts" is required.

Procedure for Nidhi Company Registration

Although enrolling a Nidhi Company is a simple process. Even yet, seeking professional assistance to complete various forms and submit them on time is advised. With more than 7 years of experience in the industry and the successful incorporation of more than 500 Nidhi Companies, LegalRaasta is also an expert in Nidhi Company Incorporations. India is the location of all of our operations.

Step 1: Applying for DIN and DSC

First, the Nidhi Company's Directors must apply for a DIN (Director's Identification Number) and a DSC (Digital Signature Certificate).
The MCA issues DINs, and DSCs are digital signatures utilised throughout the entire e-filing process. For Directors who possess both DIN and DSC, this phase may be bypassed.

Step 2: Name Approval

You currently have to choose and recommend three different names to MCA for your Nidhi Company. Only one of these three names will be accepted by MCA for your company. The suggested names must be unique and distinct from the names of currently enlisted organisations. Rule 8 of the Companies Act states that the confirmed name will be valid for 20 days.

Step 3: MoA & AoA

These must outline the primary reason for forming a Nidhi firm.
The "MoA and AoA" must be submitted with a subscription statement to the ROC (Registrar of Companies).

Step 4: Certificate of Incorporation (CIN)

To construct a Nidhi company and obtain the certificate of incorporation, it takes 15 to 25 days. This document declares the formation of an organisation and includes the corporate identification number (CIN).

Step 5: PAN, TAN and Bank Account

Finally, you must submit applications for both "PAN and TAN". Typically, it takes 7 working days to get the PAN and TAN. Later, you must submit the "Certificate of Incorporation, MoA, AoA, and PAN" to the bank in order to open a bank account.

Important Points

Minimum Requirement

The MCA incorporates a Section 8 Company.
There must be compliance with the requirements of the Companies Act of 2013, such as the required minimum of Directors and Shareholders.

Charitable Object

Article 8 Only non-benefit goals can be the focus when building a company. This company is not allowed to distribute any income or benefits it receives to its employees.
This implies that the salary will either be put back into the company or utilised to advance its core values, such as charity causes.

Management Team

The activities of Section 8 Companies are supervised by the Board of Directors in accordance with their MoA and AoA, unlike other Trusts that are represented by the Trustees in accordance with a Trust Deed.

Companies Act, 2013

Must adhere to the recommendations made by the 2013 Companies Act. keeping up with bookkeeping, filing returns, doing audits, holding board meetings, etc.

MoA & AoA

A Section 8 Company won't implement any changes to the terms of its MoA and AoA without first seeking the Central Government's approval.

Voting Rights

Depending on how many shares they own, shareholders of a Section 8 Company have different voting rights. similar to that of another organisation

Income tax

The Company must abide by the rules of the Income Tax Act.

GST Registration

In the unlikely event that Section 8 Company is subject to the provisions of the GST Act, it must register with the GST.

Conversion

It cannot switch to a different organisational structure without abiding by the rules, as material

Restrictions on Nidhi Company

Even if a Nidhi company's only goal is to engage in non-banking financial activities, it is forbidden for them to conduct any transactions that might include outside variables, such as:

  • Promote their services to attract deposits,
  • Chit funds,
  • Leasing Finance,
  • Hire-Purchase finances,
  • Lotteries,
  • Insurance,
  • Sell, mortgage, or encumber the benefit retained with it as collateral for a loan,
  • Forming a partnership to carry out loan and borrowing tasks,
  • Borrowing money from sources other than its investors or accepting deposits from them,
  • Issue debentures, inclination offers, or other obligation instruments,
  • Release equity shares with nominal values greater than Rs. 10 apiece,
  • As long as the company has shares valued at more than Rs. 100 or more than 10 times the worth of its shareholders,
  • Open a current account with its owners (but a savings account may be opened),
  • A business may lend money to or purchase a store,
  • Payment of a commission, fee, or incentive for deposit mobilisation
  • Conduct any business outside lending to and borrowing from its members,
  • Hire a Purchase Financer,
  • Reimburse any brokerage for making a loan to one of its clients.

Requirements for a Nidhi Company Incorporation

The prerequisites for registering or conducting business as a Nidhi Company are listed below.

Requirement before Registration

Minimum number of shareholders or members – 7
Minimum number of Directors -3
The required minimum capital is Rs. 5 lakhs.
DIN for Directors
Minimum 3 Directors.
Preference Shares won't be issued at all.
By accepting deposits from and making loans to its members only for their mutual interests, the company's goal is to encourage the saving habit.

Requirement after Registration

The Nidhi Company must have at least 200 members or shareholders before the end of the first year.
NOF should be more than Rs. 10 lakhs.
More than 1:20 should be used as the ratio between NOF and Deposit.
Deposits that aren't obligated should be more than 10% of total deposits.

Compliances for Nidhi Company

  • NDH-1 Form: At the conclusion of each financial year, a Nidhi Company is required to provide the list of members in this Form within 90 days.
  • NDH-2 Form: If it hasn't been able to add 200 members in its first financial year, it may use this form to ask the MCA for a delay.
  • NDH-3 Form: In addition to the NDH-1 Form mentioned above, a half-yearly return must also be completed in this Form.
  • Annual Returns with ROC: Nidhi Companies are required to file their Annual Returns with MCA using Form "MGT-7."
  • Balance sheet and Profit & Loss Statement: The financial statements and other pertinent papers must be provided yearly in Form "AOC-4."
  • Income Tax Returns: The Nidhi Company, like every other firm, is required to file its Annual Income Tax Returns by September 30 of the preceding fiscal year.

Deposits & Loans

Here, we can grasp the rules that apply to loans and deposits made to the Nidhi Company.

Deposits under Nidhi Company

The three sorts of deposits that a Nidhi firm will accept are as follows. These three types of deposits are "savings deposit, fixed deposit (FD), and recurring deposit."
On FD and RDs, Nidhi may provide a maximum interest rate of 12.5%, and on savings accounts, 6%.
Nidhi may deposit up to 20 times the amount of the first investment.

Loans from Nidhi Company

Nidhi Companies' loans can be secured by one of three types of securities. Loans may be given in exchange for "Gold, Property, Others (LIC, FD, etc.)."
A Nidhi Company cannot operate a microloan business but may lend it money with a 20% interest rate in exchange for security.
If a member refuses to pay back any amount of money, it may pursue legal action.

Frequently Asked Questions

What is a Nidhi Company?

A Nidhi Company belongs to the class of "Non-Banking Financial Companies (NBFCs)" and is therefore exempt from RBI licencing requirements. It was established with the sole intention of taking deposits from and lending money to its members.

How can you register a Nidhi Company?

According to the 2013 Companies Act, the Nidhi corporation must be registered as a public limited company. Thus, there must be at least 3 Directors and 7 Shareholders. Additionally, the proposed company's "MoA (Memorandum of Association)" must specify that encouraging thriftiness and the practise of saving among its members is its primary goal.

What steps are involved in registering a Nidhi company?

1. Apply for a DIN and DSC.
2. Find a unique name in three alternatives and seek ROC approval for one.
3. Submission of MoA and AoA
4. the CIN and certificate of incorporation
5. Open a bank account, PAN, and TAN.

What paperwork is needed to register a Nidhi company?

A passport-size photograph of each director, a copy of their PAN card, a copy of their address proof, and a copy of the company's address proof are all required. Property proof (if owned), rent agreement (if rented), electricity/water bill, etc. are all acceptable, as is the landlord's NOC (if rented).

How much money may I deposit into a Nidhi Company?

According to its most recent audited financial accounts, a Nidhi firm is not allowed to receive deposits that are more than 20 times its Net Owned Funds (NOF).

What is the upper limit on a Nidhi company's savings account?

One member of a Nidhi firm may not have a balance in their savings account greater than Rs. 1 lakh. The maximum interest rate that can be charged on any deposit should not be more than 2% higher than the interest rate that nationalised banks are required to pay on deposits of that kind.

How many Directors do Nidhi Companies need?

A Nidhi can be incorporated with as few as three directors and as many as fifteen.

How do I choose a Nidhi Company's name?

No matter if it is a Private Limited, OPC, LLP, or Public Limited company, you must make sure the name is unique and hasn't already been registered by another firm. Additionally, confirm that the name is not already a registered trademark under the Indian IP Act. Additionally, make sure the name is not overly generic. If not, the ROC might reject it. Moreover, try not to use abbreviations, adjectives. And it should end with Nidhi Limited.

How do Nidhi Rules work?

The Nidhi Companies Rules, 2014 govern Nidhi Companies. These regulations, which were put in place by the central government, outline the operating procedures for the Nidhi firm.

Who is eligible to join the Nidhi Company?

1. Only a private individual, not a corporation or trust, may join.
2. The applicant must be an Indian national who is older than 18 years old.

What guidelines apply after a Nidhi Company is registered?

After being registered, a Nidhi Company has one year to fulfil the following conditions:
1. Sign up 200 or more members.
2. Maintain a minimum of Rs. 10 lakhs in net owned funds (NOF).
3. Keep the NOF-to-deposit ratio at 1:20.
4. Unencumbered term deposits must make up at least 10% of all outstanding deposits.

How much time does the registration procedure require?

A Nidhi corporation can be registered in 30 to 40 days. According to the 2013 Companies Act, you must register the business as a limited company.

Can a person on a salary establish a Nidhi Company?

There are no restrictions on a salaried person serving as a director of a Nidhi Company.

Do you need a separate office?

No, a Nidhi Company may be established at either a residential or rented address. A registered office address does not require a public area. You only need:
1. If the property is rented, a copy of the most recent rent receipt and the rent agreement.
2. The owner's NOC.
3. Receipts from property taxes (if the property is yours)
4. The electric bill.

What limitations apply to Nidhi Company?

• It is against the law for a Nidhi Company to invest in "chit funds, insurance, leasing finance, or acquisition of securities" issued by any Body Corporate.
Preference shares, debentures, or any other similar instrument cannot be issued by a Nidhi Company.
• These businesses are prohibited from accepting deposits, lending money to non-members, or providing incentives for deposit mobilisation.

What is DIN?

A DIN, or "Director Identification Number," is provided to any current or prospective director of a company that has been or will be incorporated. The MCA has assigned it a Unique Identification Number.

Describe DSC.

Digital Signature Certificate, or DSC, stands for an authorised person's electronic or digital signature on papers. It is employed for electronically signing documents and declarations relating to the business. It is ineligible for use in tangible documents.

Describe DSC.

Digital Signature Certificate, or DSC, stands for an authorised person's electronic or digital signature on papers. It is employed for electronically signing documents and declarations relating to the business. It is ineligible for use in tangible documents.

What is NOF?

NOF or Net Owned Fund = Paid-up share capital + Free Reserves – Accumulated losses, deferred revenue Expenditure, and other intangible assets.

What criteria can a Nidhi corporation use to accept deposits?

1. Deposits that exceed 20 times the NOF cannot be accepted.
2. "Fixed Deposits" have a minimum term of 6 months and a maximum term of 60 months.
3. The duration for recurring deposits ranges from 12 to 60 months.
4. A Nidhi Company may invest and continue to invest in unencumbered term deposits in its own name with any scheduled commercial bank (other than a co-operative bank or a regional rural bank) or in post office deposits, provided that the amount invested does not fall below 10% of the deposits held as of the close of business on the last working day of the second preceding month. The 10% cap may be reduced in rare emergencies, but only with the Regional Director's consent.

What conditions must be met before a Nidhi Company can be registered?

A public limited company is how a Nidhi firm gets registered. As a result, a Nidhi firm must have a minimum of three Directors and seven Shareholders in order to be incorporated. The MOA of a Nidhi firm, however, must specify that the main goal of the proposed company is to foster and encourage a practise of thriftiness and saving among its members and accept deposits from or grant loans to only those members for their mutual interests.

Are the deposits made with the business secure and safe?

Yes, because the Central Government of India, the Ministry of Corporate Affairs, and the RBI have created laws to safeguard the security and safety of deposits, and Nidhi firms are required to adhere to these laws in full.

What is the purpose of the money/deposits that a Nidhi Company has obtained?

According to the Nidhi company rules, the Company exclusively uses the cash to make loans to the Shareholders and Members. Small loans for microfinance and business are offered by Nidhi Company.

Who is eligible to invest in a Nidhi company?

The scheme is only open to Nidhi Company shareholders and members who have a membership ID. You must be an Indian citizen and at least 18 years old to join.

How many locations can the Nidhi Company establish?

A Nidhi Company can only open three branches in its district if it continuously generated profits after taxes over the previous three fiscal years. It must first request the Regional Director's approval for any additional branches.

Sahyog incorporates Nidhi Company in which cities?

In 4 cities around Maharashtra, Sahyog offers Nidhi Company incorporation services. We registered the Nidhi corporation in "Mumbai, Pune, Amravati, and Akola."

Why should I register my Nidhi Company with Sahyog?

One of the greatest online service portals for assisting with Nidhi Company formation in India is "sahyog.in". We have five years of expertise applying for registration of Nidhi companies.

Start Business

Private Limited Company Registration OPC Registration Public Limited Company Registration Limited Liability Partnership Firm LLP Registration Partnership Firm Registration Farmer Producer Company Registration Section 8 Company Registration Nidhi Company Registration

Taxation

Income Tax Return TDS/TCS Return Income Tax Audit Income Tax Appeal GST Registration GST Return Filing GST Audit GST Appeal

Other Services

Startup India Registration ISO Certification Import Export Code (IEC) Udyam/MSME Registration Trademark Registration RERA Registration Food License Project Report For Business

Trust/Society NGO

Section 8 Company Registration 12 A Registration 80G Registration NITI Ayog Registration CSR Registration Sec 8 Company Audit & ITR Sec 8 Company Annual Filing Society/Trust Audit & ITR

Reach Us

Home About Us Contact Us
Facebook Instagram Linkedin Twitter Youtube

Get a Quote

Name(Required)