What is a Nidhi Company?

In the Indian context, ‘Nidhi’ means ‘Treasure’. However, in the financial ground Nidhi Company refers to a type of Non-Banking Financial Company (NBFC) that provides a mutual monetary benefit to the members.  Nidhi Companies are widely spread in the southern part of India.

Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) and are registered under the Companies Act, 2013. They are also known as Benefit Fund, Permanent Fund etc.

The objectives of a Nidhi Company are:

• Propagating the habit of thrift and
• Savings amongst its members,
• Receiving deposits from, and
• Lending to its members only, for their mutual benefit.

Important Features of a Nidhi Company

• Nidhi Company doesn’t require any license from Reserve Bank of India (RBI), so it is easier to form.
• Nidhi Company is always registered as a public company and it should have “Nidhi Limited” in the end.
• It cannot deal with chit funds, insurances, leasing finance or hire-purchase finance.
• It cannot accept deposit from or lend money to anyone who’s not a member.
• It cannot advertise or promote itself to ask for any deposit.
• A minimum of Rs. 5 lakhs are needed for the equity share capital to register a Nidhi Company.

Number of Members

At least seven members are required to start and register a Nidhi Company and three of them must be the Directors of the company.
 

Required Documents for Nidhi Company Registration

1. Proof of the registered place of business (Ownership documents/ rent or lease agreement)
2. No Objection Certificate (NOC) signed by the landlord/owner
3. Identity proofs of the Members
4. Address proofs of the members
5. Photos of the members
6. PAN card copies of the members
7. Digital Signature (DSC)
8. Director Identification Number (DIN) of the directors
9. Memorandum of ALL(MOA)
10. Articles of Association of the company (AOA)

Only one object will be mentioned in MOA of the company: “cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.”

How to achieve ‘Nidhi’ status?

Within one year of its registration

1. Nidhi Company registration should have a minimum of 200 members.
2. The net funds should be at least 10 lakh rupees or more.
3. The term deposits must be 10% or higher than the outstanding deposits.
4. The net owned funds to deposits ratio should not exceed 1:20.

If a Nidhi Company meets all the above conditions, the form NDH-1 should be filed along with the fees within 90 days from the end of the first financial year. The form must be certified by an appointed CA/CS/CWA.

NDH-2 form has to be submitted to the Regional Director within 30 days for an extension of another financial year.

How can we help you? 

Online Legal India^TM helps you to register for a Nidhi Company online without any hassle and at very nominal charges.  Our in-house CA panel will help you in drafting MOA/AOA, processing MCA and any other formalities till the end of the process.

Not just that, additional services like GST registration, filling, modifications, and Trademark registration and many more are also available on our platform. Online Legal India^TM is a one-stop solution for all your business requirements and legal assistance.