What is a Nidhi Company?
The word ‘Nidhi’ in the Hindu religion denotes treasure. Nidhi Companies are recognized under Section 406 of Companies Act, 2013. A Nidhi Company in India belongs to the non-banking financial sector (NBFC) and is incorporated primarily with the objective of encouraging the habit of saving and creating reserve funds amongst its members whereby the company receives deposits from its members and can lend money only to its members for mutual benefit. For Nidhi company does not require RBI Approval, Nidhi company registration is easy and no need to visit a government office. Enterslice is a leader in Nidhi company registration, providing services for RD, FD & Nidhi company Business plan etc.
What is Nidhi Company Registration?
As we have discussed Nidhi Company is a type of Non-Banking Financial Company. But unlike RBI regulated NBFC, Nidhi Company registration norms are less stringent. Reserve Bank of India approval is not required for Nidhi company registration in India.
Nidhi Company registration procedure is quite simple and straightforward and is done as per the provisions of Companies Act, 2013. Nidhi Company Registration is done as a public limited company. Thus it requires at least 7 shareholders and 3 directors. The minimum capital requirement for Nidhi Company Registration is 5 lakh rupees, which is to be increased to Rs. 10 lakh in one year span.
In order to instill a better understanding regarding Nidhi company registration in India, we have provided here detailed information for Nidhi company registration process, fee structure and timeline as well. If you plan to register a Nidhi company please click on the Get Started button or email at firstname.lastname@example.org. Our consultants will contact you with further details.
What are the Basic Features to know before Nidhi Company Registration?
- Nidhi company registration is recognized under section 406 of the Companies Act, 2013 and is governed by Nidhi Rules, 2014.
- Is regulated by the Ministry of Corporate Affairs and Nidhi company registration is done like a Public Limited Company.
- The Reserve Bank of India has the authority to issue directives to the Nidhi Company regarding their deposit acceptance activities. However, to form the company or register it, no formal approval from RBI is required.
- The primary business of these companies is to borrow and lend to its shareholders-members only.
- It is mandatory that within a year of Nidhi company registration, it must have a minimum of 200 members on-board.
- A Nidhi Company needs to add the words ‘Nidhi Limited’ to at the end of the company name.
- 80% of Nidhi company registration in India is done in Tamil Nadu.
Check List for Nidhi Company Registration
- KYC of all the Directors and Shareholders
For Nidhi Company registration minimum 3 Directors and 7 shareholders are required. All the proposed Directors and shareholders are required to provide self-attested KYC documents including PAN Card, Aadhar card and Election id / DL / Passport, latest bank statement or Utility Bills as address proof.
- Digital Signature
Digital signature (DSC is a basic requirement to initiate the Nidhi company registration procedure as all the forms are submitted in soft copy and are required to be digitally signed by the applicant.
- Name Approval
Before Nidhi company registration the applicant is required to select a unique name for the proposed Nidhi Company. There must not be any registered company or trademark with the same name. Such name must be reserved with the MCA either through Reserve Unique Name (RUN) facility or it can also be done through SPICe along with the final Nidhi Company Registration. Important points to be considered for name selection are discussed further.
- Final Incorporation
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. This is done to make Nidhi company registration procedure faster and more efficient. Once the Nidhi Company registration application is approved e-PAN and e-TAN are issued along with the Registration Certificate.
What are the Benefits of a Nidhi Company Registration?
- It has a separate legal entity
- Nidhi company registration is relatively easy and less complicated.
- It is beneficial for the working class, middle and lower income groups.
- Lower rates of interest
- It has a continuous or uninterrupted existence until it is dissolved legally
- Since Nidhi company registration and monitoring is done by the government, they are more credible than Mutual Benefit Organizations.
- Requires minimum documentation
How can Enterslice help in Nidhi Company Registration?
We at Enterslice have a team of professionals ready to solve all your queries and provide hassle-free Nidhi Company registration services. We have a very smooth workflow. You can contact us in the following manner;
- You can visit our website and submit inquiry along with required information in ‘Request a call back’ section for Nidhi company registration.
- Once the query is generated our Nidhi Company registration expert executive will give you a call back in 4-5 days.
- Our experts can clear all your doubts and in case of any further query and information on Nidhi company registration you can send us an email on email@example.com
- Once the order is created a unique order number will be shared which can be used to track the progress of the order.
- You can provide the required documents either through email or you can also upload them using our Enterslice Mobile app is available on Android and Apple App Store.
- Once partial payment is received your order will be assigned to our expert service team, who will handle end to end Nidhi Company Registration process.
- You can track the order for Nidhi company registration at every step of the way using the Order number shared with you. For any kind of feedback or complaints, you can write to us at firstname.lastname@example.org
What to consider for Name Selection before Nidhi Company Registration?
Before Nidhi Company registration the most important part is the name selection for the proposed Nidhi Company. The company name must be selected keeping in mind the naming guidelines provided by the MCA and it must be meaningful and relevant to the object. Following is a list of factors which must be kept in mind while selecting the Nidhi Company Name;
- Concise & Easy
While selecting a name for the proposed Nidhi Company it must be ensured that it is precise and has a good recall value. As complicated names are not easy to remember and thus act as a drawback.
- Must be Unique
There must not be any existing company or trademark registered with a same or similar name. It must neither be phonetically similar nor should it identical in any other way.
Proposed name must be meaningful to the objects of the company, its brand value, and intentions of the promoters.
Every Nidhi Company’s name must end with ‘Nidhi Limited’.
- Must not be Offensive
The proposed name must not include any kind of foul phrases or any other objectionable word which insults any culture, religion or group of people.
- Must not violate any laws
The name selection must be done as per the provisions of Emblems and Names (Prevention of Improper use) Act, 1950. And it must also not violate any other law.
Why Opt for Nidhi Company Registration?
If you are planning to start a finance related activity and confused id Nidhi Company Registration is the apt solution for it or not. Here we have listed out a few reasons explaining why should register a Nidhi company.
- Separate Legal Existence
As Nidhi company registration is done as per the provisions of Companies Act, 2013 it has a separate legal entity as from its promoters and shareholders. Nidhi Company can acquire property on its name and also incus debts. The directors managing the company are not liable in any way.
- Perpetual Existence
As the company has separate legal existence it is not affected by death or departure of any one or all of its shareholders. After Nidhi Company registration it will be in existence until it is legally dissolved as per the provisions of the law.
- Management is Easier
Unlike other NBFCs which are managed by RBI to execute changes in Nidhi company is easier. Simple forms are required to be filed with MCA.
- Credibility in market
As Nidhi company registration and monitoring are done by the Ministry of Corporate affairs they are considered more credible as compared to other similar institutions regulated by state governments.
What are the Minimum Requirements for Nidhi Company Registration?
For Nidhi company registration there are certain minimum requirements that are required to be met. Few such requirements are to be met before incorporation and some are required to be met within completion of one year from Nidhi company registration.
1. Requirements to be met before Nidhi Company Registration
Before filing an application for Nidhi Company Registration the applicant is required to ensure that following pre-requisites are met with:
- The company needs to have a minimum of 7 shareholders
- Out of these, there need to be a minimum of 3 directors
- The minimum paid up equity share capital needs to be INR 5 lakh
- The company cannot issue preference shares. If already issues, such shares are to be redeemed in accordance with the terms of the issue of such shares.
2. Requirements to be met after Nidhi Company Registration
Within completion of one year from the date of Nidhi Company Registration the applicant is required to ensure that following requirements are met with:
- The net owned fund after one year of Nidhi Company Registration shall not be less than INR 10 lakh
- The minimum number of shareholders need to be 200
- The ratio of net owned funds to deposits cannot be more than 1:20
- Unencumbered term deposits of not less than 10% of the outstanding deposits as specified in Rule 14.
What are the Documents Required for Nidhi Company Registration?
- Identity proof of Directors and shareholders – PAN card for Indians and passport copy of foreign nationals
- Address proof of the directors and shareholders – bank statements, electricity bills that are less than 2 months old
- Aadhar Card of Directors and shareholders
- Proof of registered office in India – recent copy of electricity bill or property tax receipt or water bill. Rental agreement or an ownership document with a no objection certificate from the landlord.
- Passport size photographs of the directors
- NOC From the owner of the property
What is the Procedure of Nidhi Company Registration?
The Nidhi company registration process involves the following steps:-
The proposed directors of the company need to apply for Digital Signature (DSC). DSC is issued by the Certifying Agencies and the DPIN is issued by the Ministry of Corporate Affairs (MCA).
The next step involves applying for the company name through RUN service. The applicant can provide up to 2 name options to MCA even before starting actual Nidhi Company Registration process.
After receiving approval of the name, the e-Memorandum of Association (MoA) and e-Articles of Association (AoA) are drafted and filed with MCA through SPICe Forms. Complete details of the proposed directors, as well as shareholders, are also provided in the SPICe Form along with supporting documents as attachments.
Within a span of a month, the Nidhi Company Registration is completed and you receive the certificate of registration along with the Company Identity Number. The certificate of Incorporation is a proof of the Nidhi Company registration with MCA. Along with company registration Director Identification Number (DIN) for directors is also issued, if they did not already have one.
What are the General Restrictions Imposed on Nidhi Company Registration?
As per Rule 6 after successful Nidhi company registration it is not allowed to:
- 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 a 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.
Which Authority Regulates Nidhi Company Registration?
Nidhi Company belongs to the Non-banking finance sector. Unlike other NBFCs that are registered under Companies Act, 2013 and are regulated by Reserve Bank of India, Nidhi Company has a separate regulating rule by the name of Nidhi Rules, 2014.
Nidhi Company registration is recognized by Companies Act, 2013 under Section 406. Its main area of operation is borrowing and lending business which it can do only between its registered members. Because it deals with its members and shareholders, RBI has exempted Nidhi Company registration and operation from its core provisions. However, RBI retains its rights to issue directions for matters relating to deposit-taking activities of Nidhi Companies.
Who should Opt for Nidhi Company Registration?
If you are wondering whether to opt for Nidhi company Registration or not, we have prepared the following list of reasons to go for it:
- If you have a great understanding of local people and want to operate on a local level then Nidhi company registration is the best option.
- It is the most economical way to start a finance-related business is to go for Nidhi Company Registration.
- If the main objective is to promote thrift and savings among the members.
How is Nidhi Company Registration different from other NBFCs?
The key differences between a Nidhi Company registration and other Non-Banking Finance companies which are regulated by Reserve Bank of India are listed in the table.
|Particulars||Nidhi Company||RB Regulated NBFC|
|1. Area of Operation||They can only operate at a local level.||They can operate on a national level. There is no geographical limitation.|
|2. Capital Requirement||For incorporating a Nidhi company capital of Rs. 5 Lakh is required.||For incorporating an NBFC minimum capital of Rs. 2 Crore is required|
|3. Minimum Number of directors||Minimum 3 Directors are required.||Minimum 2 Directors are required.|
|4. Minimum Number of shareholders||Minimum 7 shareholders are required.||Minimum 2 shareholders are required.|
|5. RBI approval requirement||No RBI approval is required||RBI approval is mandatory before business commencement.|
|6. Preference shares and debentures||Cannot issue preference shares or any other kind of debt securities.||Can issue preference shares, debentures or any other debt securities.|
|7. Acquisition of securities||Cannot acquire securities of any other institution||They can acquire securities issued by a government or any other local authorities.|
|8. Main Object||To carry on the business of loans and advances, security acquisition, hire purchase, insurance, leasing etc.||To cultivate the habits of thrift and savings among its members.|
What is the Nidhi Company Registration Fee?
Nidhi Company Registration process can be completed in 10 to 15 days with the help of our expert team. All you have to do is provide all the required documents and Nidhi Company Registration Fee. A complete break-up of Nidhi Company Registration Fee charged by us is provided in the table below:
|Digital Signature Certificate (DSC)||7||7000|
|Director Identification Number (DIN)||3||1500|
|Company’s Name Reservation Fee||1||1000|
|MOA, AOA Government Fee*||1||1500|
|TOTAL COST OF NIDHI COMPANY REGISTRATION||20,000|
What are the Compliance Requirements after Nidhi Company Registration?
Once Nidhi Company Registration is completed it is required to make sure that all the relevant compliances and filings are done on time as and when required under various laws. Following is a list of compliances to be done after successful Nidhi Company Registration:
- Within 60 days from the end of every financial year, the Nidhi Company is required to file Form NDH 1.
- Along with the above form, a half yearly return is also required to be filed in Form NDH 3.
- There are certain requirements that are required to be met within a year after Nidhi Company Registration like 200 members, 10 lakh Net owned funds. If the Nidhi Company fails to meet such requirements then it is required to apply for an extension in the Form NDH 2.
- Like any other registered company after Nidhi Company Registration it is also required to file an annual return with MCA through Form MGT-7.
- Nidhi company financials and other relevant documents are required to be submitted in Form AOC-4.
Nidhi Company Software Requirement
Our team at Enterslice can also provide Nidhi Company Software after successful Nidhi Company Registration. This software makes the business operation and entries much easier for you. Interested prospective members can automatically apply for the company’s membership through the software’s interface available on your website. this software helps in various ways to grow your business. Following are some of its basic features:
- It is very user-friendly and can be easily accessed by all the existing as well as prospective members.
- The software is fully secure and caters to all the technical needs for managing Nidhi business.
- The Nidhi company software has a responsive layout.
- Along with all the required features, it has an attractive and creative design.
- Provides the required technical support to the organization.
- It makes the doing business easier.
- helps avoid errors as everything is automated.
- Along with all the above mentioned features it also very helpful from the marketing point of view.
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:
- Member must be an individual, no corporate body or trust can become a member.
- 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;
- Preference shares
- 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|
|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:
- Register at least 200 members
- Maintain minimum net owned funds of Rs. 10 Lakh.
- Maintain net owned funds to deposit ratio of 1:20
- 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:
- Goal, Silver, other precious metal and jewelry.
- Immovable Property
- Government securities, national saving certificates, insurance policies, Fixed Deposit receipts etc.
Nidhi Company is not allowed to issue the following type of loans:
- Personal Loans
- Asset/ Vehicle finance
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.
Hong Kong [China], May 04 (NewsVoir): Enterslice has earned a remarkable reputation for helping..
Apart from helping these startups raise organized funding, this announcement also means that the..
It's quite understandable that the rules and regulations of the Reserve Bank of India make it a c..
" Enterslice use technology better than others. That saves time and money; Team enterslice is more efficient than traditional competitors, and that helps to pass on the cost advantage to its clients. The company is building a high-level transparency in legal services by optimum use of technology and process automation in consulting. I highly recommend this company. "
" Excellent advisory role by Enterslice Team. They are a trusted partners to us. Narendra and his team helped us with our pre NBFC applications and Post NBFC advisory services. "
" Amazing services provided by your organization. They have completed our NBFC registration order within stipulated time period of 90 days. They provide constant guidance and support in the process. Their support in building fintech software is amazing. "