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What is a Nidhi Company?

Belonging to the classification of non-banking business firms and identified below Section 406 of the Companies Act, 2013, it is regulated by the central government. The basic business of such a company is to facilitate lending money between the core members of the company. Examples of a Nidhi Company are permanent funds, mutual benefit funds, a mutual benefit company and benefit funds. The main concept behind developing a Nidhi Company is to obtain cash deposit from associates or contribute to them, for the common gain of the two parties. All lending and acquiring must agree with the decree stated in chapter XXIV of Company Rules, 2014.

Documents Required for Nidhi Company Registration

TO BE SUBMITTED BY ALL DIRECTORS

Self-attested copy of PAN Card
Self-attested copy of Driver’s License/ Voter ID/ Aadhaar Card/Passport
Self-attested copy of Bank Statement/ Telephone Bill/Mobile Bill/ Electricity Bill
Passport-size Photograph
Specimen Signature Certificate

Advantages of Nidhi Company

Cheaper to Borrow

As a member, one can borrow money at a minimum rate, relative to the rate at which banks lend money.This can be a major advantage in times of need, as different individuals in the mutual benefit society are likely to need funds at different points in time.

Encourages Savings

It encourages all its members to save money and encourages a thrifty lifestyle. A Nidhi company, after all, is a mutual benefit society wherein members can lend or borrow money and accept financial aid amongst them.

Fewer Complications

Borrowing and lending to known persons, where the procedure is fixed, is much less complicated than dealing with banks or in an informal setting. A Nidhi Company enables its members to unlock the potential of their money and gain from lower interest rates when they require money themselves.

Transforming the world's financial services companies

Basics of a Nidhi Company

Whether you’re looking to create just one project, or multiple project, we have a plan that will best match your needs.

Regulated by MCA & RBI

The financial dealings and all the registration processes of a Nidhi company are regulated by the Ministry of Corporate Affairs. The deposit acceptance activities conducted by the Nidhi Company also come under the scanner of Reserve Bank of India and the latter has the rights to look into the financial dealings. Nidhi companies are only allowed deposits which are over six months and less than five years old.

Number of Members

A Nidhi Company must accumulate 200 members within a year of its formation.If it fails to do so, it needs to apply for permission to extend the time limit to acquire more members. Three of its members will be appointed as directors and there must be seven stockholders on inception.

Equity Capital

A Nidhi Company must have an equity share capital of Rs. 5 lakh on inception. This entire amount must be paid-up. Moreover, 10% of the total deposit collected from members must be in a fixed deposit in a nationalised bank.

FAQs on Nidhi Company

1. How can I start a Nidhi company and the time period it takes to register for one?

You need to appoint a minimum of three directors and have seven shareholders. So, a total of 10 individuals are needed to form a Nidhi. You need to register the company as a limited company under Companies Act, 2013. Nidhi Companies take almost a month or even longer to register.

2. How can I expand the operations of my Nidhi Company to different areas?

Yes, you can expand operations.A minimum of three branches can be opened in a particular district. In case you want to expand outside the district or want to open more than three branches, intimation needs to be issued 30 days prior to opening to the Registrar of Companies.

3. Should I dissolve my Nidhi Company because it has not gained the necessary numbers of representatives now that it has successfully completed one full year of tenure?

The conditions laid down by the Act says that a Nidhi company should acquire a minimum of 200 members within one year. However, in case you have not been able to acquire the required numbers, you can apply for an extension with the authorities.

4. In a Nidhi company, will any member be allowed to credit and debit cash to the general fund?

No, only the members are allowed to deposit, borrow or lend funds.

5. What are the criteria to become a representative of a Nidhi Company?

Any person can deposit, lend or borrow money through the provisions provided by Companies Act, 2013. They can all become members of the Nidhi provided they are not a corporation or a company.

6. In a Nidhi, what should be the set limited expectation for representatives for cash deposits?

A Nidhi can accept deposits not exceeding 20 times of its net owned assets as mentioned in the last audited statements.

Procedure for Nidhi Company Registration

Why Vakilsearch

8 BUSINESS DAYS A minimum of three directors must apply for a DSC, which is necessary to file the Nidhi company registration documents. For this, you will only need to provide a few scanned documents and details; our representatives will fill the form and submit it online.
14 BUSINESS DAYS As soon as we apply for the DSC, we will apply for the company name. and submit the rest of the incorporation documents. Altogether, this will take up to a week, depending on whether you have all the documents in order.
35 BUSINESS DAYS Having a Nidhi registration done is quite simple. It takes 35 business (dependent on government authorisation) days for your incorporation certificate to reach you. So just spill a wee bit about your start-up or business and we’ll have your registration done as quickly as we can. We handle 400 requests in a month just like yours, so hurry!
9.1 CUSTOMER SCORE We make your interaction with government as smooth as is possible by doing all the paperwork for you. We will also give you absolute clarity on the process to set realistic expectations.
160 STRONG TEAM Our team of experienced business advisors are a phone call away, should you have any queries about the process. But we'll try to ensure that your doubts are cleared before they even arise.
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