All about Nidhi Company

Things You Should Know About Nidhi Company

Online Legal India LogoBy Online Legal India Published On 05 Mar 2022 Updated On 06 Jan 2023 Category Nidhi Company 1 comments

There are a lot of different types of companies available in India. A few of them are Private Limited, Public Limited companies, One Person companies, Section 8 Companies, and Nidhi company.

Nidhi Company in Brief

Nidhi company registration refers to the process of registering a company under section 406 of the Companies Act 2013. One of the major factors here is minimum equity share must be Five lac Rupees.

The primary aim of this company is to hold at the commercial enterprise of accepting deposits and lending cash to member-debtors most effective towards jewels, etc., and loan of property. For over a century Nidhis, with the goal of cultivating the addiction of thrift, was usually promoted with the aid of using public-live guys drawn from prosperous neighborhood persons, legal professionals and specialists like auditors, educationists, etc., which includes retired persons. The place of operation turned into the neighborhood – inside municipalities and panchayats. Some Nidhis due to their monetary and administrative electricity opened branches in the respective sales district or even outside.

The precept of mutual advantage has been to pool the financial savings from individuals and lend most effectively to individuals and in no way should cope with Non-individuals. Nidhis had been now no longer anticipated to interact themselves withinside the business of Chit Fund, rent purchase, coverage or in another business which includes investments in stocks or debentures. As said, those Nidhis do their commercial enterprise most effectively with Members. Such Members are the most effective individuals. Bodies Corporate or Trusts are in no way to be admitted as Members.

Regulatory aspects of the said company

As per section 406 of the Companies Act, 2013, “Nidhi” means a company that has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.

In exercise of powers conferred under section 406 read with section 469 of the Companies Act, 2013, Central Government issued the Nidhi Rules, 2014 which came into force on the 1st day of April 2014. Nidhi Rules, 2014 applicable to:

  1. Every company which had been declared as a Nidhi or Mutual Benefit Society under sub-section (1) of Section 620A of the Companies Act, 1956.

  2. Every company functioning on the lines of a Nidhi company or Mutual Benefit Society but has either not applied for or has applied for and is awaiting notification to be a Nidhi or Mutual Benefit Society under sub- Section (1) of Section 620A of the Companies Act, 1956. 

  3. Every company is incorporated as a Nidhi pursuant to the provisions of Section 406 of the Act.


The above blog is all about Nidhi company registration and its aspects and why This is one of the most popular kinds of companies in the Indian market.

Share With :

Leave A Comment


Nilanjan Maji

18 Mar, 2022

I was wndering what nidhi company is? I get my answrrs here


Anjali Malhotra


Anjali Malhotra