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Nidhi Company Registration

Nidhi Company Registration is a process of incorporating an NBFC and is governed by the provision of Companies Act. Further, it is also known as Mutual Benefit Finance Company.

Package Inclusions –

  • DSC (7 DSC)
  • DIN for 3 Directors
  • Company Name Reservation (1 Run)
  • Spice Form / MOA & AOA (1 Spice)
  • Corporate Identification Number (CIN)
  • PAN & TAN
  • Bank Account Opening template
  • Free Call by CA about the Compliance requirement
  • Assistance in Nidhi Company Software

(Note – Govt. Fees Estimated as per ROC Mumbai )

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What is Nidhi Company Registration?

Nidhi company registration is the process of incorporating a type of NBFC called Nidhi.This NBFC is also known as Mutual Benefit Finance Company. Starting a Nidhi company is one of the best options for people who want to commence a finance business with low capital investment.

A Nidhi company, also known as Nidhi Bank aims to cultivate the habit of savings and thrift amongst its members.Its main area of operation is borrowing and lending of funds.As per the rules,it can only make transactions with its registered members and within the permitted district of work.

The Nidhi Company is registered with the Ministry of Corporate Affairs and regulated by the Companies Act 2013. The registration process is comparatively easy in comparison to registration processes of other NBFCs.

In this NBFC, there is no eligibility criteria of a minimum qualification for Directors. Additionally, this category of NBFC does not require the approval of Reserve Bank of India for incorporation.It is mandatory that every Nidhi company has to end their name with “Nidhi Ltd.”

Process for Nidhi Company Registration

  1. KYC of all the Directors and Shareholders

  2. Digital Signature

  3. Name Approval

  4. Final Incorporation (MOA & AOA)

  5. PAN & TAN

The Nidhi Company incorporation procedure includes submission of the prescribed items;

  • KYC of all the Directors and Shareholders

    Minimum 7 Members and 3 Directors required. Directors and Members can be the same.

  • Digital Signature

    Digital signature (DSC) is a basic requirement to initiate the Nidhi Company Registration procedure as all the forms are submitted should be self-attested

  • Name Approval

    The Proposed name of the Name of Nidhi company must be unique and it should not be similar. The name can be reserved through Reserve Unique Name (RUN) facility

  • Final Incorporation (MOA &AOA )

    Once the name is approved the Nidhi Company Registration application is submitted in SPICe Form along with Nidhi company’s Articles of Association and Memorandum of Association. After proper inspection of the application, COI is issued.

  • PAN & TAN

    PAN and TAN applications can be done along with Nidhi Company Registration as it is included in the SPICe Form.

Documents for Nidhi Company Registration

  • Identity proof of Directors and shareholders
  • Copy of Directors Pan card
  • Address proof of the directors and shareholders
  • Aadhaar Card of Directors and shareholders
  • Proof of registered office (Electricity/Water bill)
  • Copy of rent agreement (If rented)
  • Passport size photographs of the directors
  • NOC from the owner of the property

8 Key Points to Know before Starting a Nidhi Company Registration in India

  • Lowest Fees

    You can start Nidhi Company in less than Rs 20,000/-

  • Regulator

    Companies Act 2013 & Nidhi Rules 2014 Regulates the function and operations of Nidhi Company in India.

  • No Approval from RBI

    Nidhi Company is outside the preview of Reserve Bank of India. It does not require a license from RBI to operate a loan business in India.

  • No Microfinance Activity

    Nidhi Company is not allowed to perform vehicle finance business & microfinance business in India

  • Minimum 200 Members

    Within 12 month’s minimum 200 members should be added

  • Interest on Loan

    You can charge up to 20% p.a. by following the reducing balance method.

  • Branch

    District level operations for initial 3 Years. After that 3 offices can be set up within the district or outside the zone after taking the approval from the Regulator Director.

  • Loan against Security

    A Nidhi Company can only give credits against security. These securities include Gold, Property, and FD & LIC.

Online Requirements for Nidhi Company Registration

There is a check list of requirements that are essential for registration or operating of a Nidhi Company.

Requirement before the Incorporation Period

  • Minimum number of shareholders- 7
  • Minimum number of Directors -3
  • The minimum capital requirement is of Rs. 5 lakhs
  • DIN for Directors

Requirement after the Incorporation Period

  • The minimum number of shareholders must be 200 at the end of the 1st year
  • Net owned fund should be more than Rs. 10 lakhs
  • The ratio for net owned funds to deposit should be more than 1:20
  • Unencumbered deposits should be more than 10 % of outstanding deposits

Benefits for Nidhi Company Registration

Nidhi company incorporation is prevalent among people who want to start financial services but have the limitation of capital. There are many reasons for the popularity of Nidhi companies such as

  • Separate Legal Existence

    It has a separate legal entity as from its promoters and shareholders. Nidhi Company can acquire property on its name and also incur debts.

  • Limited liability

    The liability of directors and managers is limited as per The Companies Act 2013.

  • Perpetual Existence

    It has a perpetual existence; it is not affected by death or departure of any one or all of its shareholders.

  • Ease of Management

    Executing changes in Nidhi Company is more comfortable in comparison to other NBFCs.

  • Credibility in market

    The Ministry of Corporate affairs regulates Nidhi Companies. Hence, it is considered more credible as compared to other similar institutions controlled by state governments.

12 Things to Know About Nidhi Rule 2014

As per rule 6 of the regulations mentioned in the Nidhi company rules 2014, the following activities are prohibited:

  • Carry on the business of chit fund, leasing finance or acquisition of securities
  • To issue preference shares, debentures or any other debt instruments
  • Open a current account with its members
  • Acquire another company by purchasing securities of the company
  • Carry on any other business other than borrowing and lending to its members
  • Accept deposit from a person who is not its member
  • Lend or take the deposit from a corporate
  • Enter into a partnership for borrowing or lending activities
  • Issue advertisements for soliciting deposits
  • Pledge assets of its members kept as a security
  • Pay commission or incentive for mobilizing deposits

5 Things to Know before Applying Name Approval of the Nidhi company

The name of Nidhi Company must be selected keeping in mind the guidelines provided. Following is a list of factors which must be keep in mind while choosing a name.

  • Concise & Easy- Easy to remember, Easy to pronounce
  • Must be Unique-Not identical with any existing company
  • Relevancy- Must be relevant to the objects and brand value
  • The suffix – It must end with ‘Nidhi Limited’ or ‘Mutual benefit Nidhi Limited.’
  • Must not be Offensive – Not be objectionable to any culture, religion or group of people
  • Must not violate any laws-Must follow provisions of Emblems and Names (Prevention of Improper use) Act, 1950.

Who Regulates the Nidhi Company?

Nidhi Company belongs to Non-banking financial sector. NBFCs are registered under the Companies Act, 2013 and are regulated by Reserve Bank of India. However, Nidhi Company is an exception in this case. It has a separate regulating rule by the name of Nidhi Rules, 2014.

Nidhi Companies are registered as per Section 406 of the Companies Act, 2013.

RBI has exempted Nidhi Company Registration and operation from its core provisions because it deals with the members and shareholders. However, RBI retains its rights to issue directions for matters relating to deposit-taking activities of Nidhi Companies.

Nidhi Company Registration Fee?

A complete break-up of Nidhi Company Registration Fee is all inclusive at Rs 17,999/. Nidhi Company Registration process can be completed in 10 to 15 days with the help of our team of industry expert professionals. All you have to do is to provide all the required documents and Nidhi Company Registration Fees.

6 Mandatory Compliance for Nidhi Company

  • NDH 1

    The Nidhi Company is required to submit the list of members within 90 days from the end of every financial year.

  • NDH 2

    The Company can request MCA for the extension in case Nidhi Company is not able to add 200 members in a year.

  • NDH 3

    Along with the above form a half yearly return is also required to be filed in Form NDH 3.

  • ROC Annual Returns

    It is mandatory for a Nidhi Company to file annual return with MCA through Form MGT-7.

  • Profit Loss and Balance sheet

    The financial statements and other related documents are required to be submitted in Form AOC-4.

  • Income tax Returns

    Nidhi Company is required to file annual returns by 30th September of the following financial year.

How Enterslice helps you to get Nidhi Company Registration?

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Frequently Asked Questions about Nidhi Company Registration

No, unlike other NBFCs, Nidhi Company Registration and regulation is exempted from core provisions of Reserve Bank of India.

Both such entities are different on various levels. Nidhi is not regulated by RBI and Nidhi Company Registration requires a much smaller amount of capital as compared to Rs. 2 Crore paid capital requirement for NBFCs.

Nidhi Company Registration, as well as regulation, is done by the Ministry of Corporate Affairs. All the activities are done as per the provisions of Nidhi Rules, 2014.

As Nidhi Companies are not regulated by RBI, in order to ensure smooth and transparent operations of Nidhi Company central government has introduced Nidhi Rules, 2014. These rules contain the governing principles for Nidhi company operations.

After Nidhi Company registration the most important part is to know that you can only accept deposits from your registered members.

In order to become a member of a Nidhi company following requirements are to be met:

1. Member must be an individual, no corporate body or trust can become a member.
2. The member must have attained the age of 18 years.

NO, RBI approval is not required for them. Business can be started as soon as Nidhi Company Registration process is completed.

NO. Microfinance as the term specifies is small credit facility. It is a very famous business type in semi-urban and rural areas. However, in order to conduct microfinance business RBI approval is required and can only be done any large NBFCs.

NO. Nidhi companies cannot issue following securities;

1. Preference shares
2. Debentures
3. Any other kind of Debt security

For Nidhi Company loan limit is dependent upon the amount of deposits it holds. Following are specified limits:

Deposit amount (in Rupees) Loan Limit (in Rupees)
Less than 2 Crore 2,00,000
2 Crore-20Crore 7,50,000
20 Crore-50Crore 12,00,000
More than 50 Crore 15,00,000

No. Nidhi Company cannot operate outside the state it is registered in.

Once Nidhi Company registration process is completed it is required to meet the following requirements within a year:

1. Register at least 200 members
2. Maintain minimum net owned funds of Rs. 10 Lakh.
3. Maintain net owned funds to deposit ratio of 1:20
4. Out of all the outstanding deposits, 10% must be unencumbered term deposits.

If any Nidhi company fails to meet the post-incorporation requirements within a year's time span then it must apply for an extension with Regional Director in Form NDH-2.

No, as per Nidhi companies are not authorized to promote its activities through any kind of advertisement This is done because the main object of Nidhi is to promote the habit of thrift and saving habits among its member and not to solicit deposits through promotions to non-members.

Similarly, Nidhi Company is not authorized to remit any kind of brokerage or incentive for promotion or mobilization of deposits to members or granting loans.

NO, Nidhi Company cannot purchase securities/shares of other organizations or institutions.

No. Nidhi Company is not authorized to open a current account with its members.

No, Nidhi company is neither authorized to acquire through the purchase of its securities nor does it has the power to control its management or change the composition of its management.

For any such activity previous approval from the respective Regional Director is required to be obtained after passing a special resolution in its general meeting.

Nidhi Companies are not authorized to carry on any other kind of business other than lending and borrowing on its own name.

Yes. It cannot open another branch until it has earned a net profit after tax consecutively for three straight years after successful Nidhi Company registration.

After meeting the condition of earning consecutive profits for 3 years, Nidhi Company is allowed to open 3 branches in the same district where Nidhi Company registration is done.

However, for opening any more branched either inside or outside the district boundaries prior permission from the Regional director is required.

No, Nidhi Company can only issue secured loans to its members.

Nidhi Company can issue secured loans only against following securities:

1. Gold, Silver, other precious metal and jewellery.

2. Immovable Property

3. Government securities, national saving certificates, insurance policies, Fixed Deposit receipts etc.

Nidhi Company is not allowed to issue the following type of loans:

1. Personal Loans
2. Asset/ Vehicle finance
3. Microfinance
4. Hire-purchase

Enterslice has branch office across India. As a result, we provide PAN-India services. Besides, Nidhi company registration in India is a totally online procedure. Thus, we provide Nidhi company Registration services all over India irrespective of where you want your registered office to be located at.

At Enterslice, we have a group of expert professionals like Chartered Accountants, Company Secretaries, lawyers and other industry experts who are bringing in their deep insight into the laws as well as current industry atmosphere. we ensure to solve all your queries and execute all the order with full dedication and focus.

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