Introduction to Nidhi Company

In the realm of financial institutions, one type that often catches the attention of entrepreneurs and investors is a Nidhi Company. Nidhi companies, derived from the Sanskrit word meaning "treasure," are non-banking financial entities primarily operating in India. In this blog, we will explore Nidhi company’s meaning, Nidhi company registration process, operational framework, and the steps involved in obtaining a Nidhi company license.

What is a Nidhi Company and How Does it Work?

A Nidhi company is a type of mutual benefit society that operates in the form of a non-banking financial company (NBFC). It is regulated by the Ministry of Corporate Affairs (MCA) and governed by the Nidhi Rules, 2014. The main objective of a Nidhi company is to foster the habit of thrift and savings among its members and provide them with financial assistance when needed.

A Nidhi Company is a unique type of non-banking financial institution (NBFC) in India that focuses on cultivating savings and mutual benefits among its members. It operates based on the concept of mutual fund pooling, which has deep roots in Indian tradition.

Here are the key aspects to understand about Nidhi Companies:

  • Purpose and Objectives: The primary goal of Nidhi Companies is to promote thrift, savings, and financial discipline among their members. They provide a platform for individuals to contribute their savings and avail of loans at reasonable interest rates. Nidhi Companies aim to facilitate financial assistance among their members and foster a sense of financial responsibility.
  • Legal Framework: Nidhi Companies are governed by the Nidhi Rules, 2014, which are part of the Companies Act, 2013. These rules define the eligibility criteria, registration process, minimum capital requirements, and operational guidelines for Nidhi Companies.
  • Membership Structure: Nidhi Companies can only have individual members and cannot issue shares to the public. Their membership is restricted to a specific group of individuals. Members contribute to a common pool of funds through savings deposits, recurring deposits, and fixed deposits. The membership base of Nidhi Companies is limited and exclusive.
  • Minimum Requirements: To establish a Nidhi Company, it must have a minimum of 200 members within one hundred twenty days of its incorporation. Additionally, it should maintain a minimum net owned fund (NOF) of INR 20 lakhs (Indian Rupees twenty Lakhs). The NOF to deposits ratio should not exceed 1:20.
  • Operational Limitations: Nidhi Companies are restricted from engaging in certain activities such as chit funds, leasing, hire-purchase, insurance, or speculative businesses. They are also prohibited from issuing preference shares or debentures. The loans they provide are exclusively for their members and are primarily utilized for personal, educational, or housing purposes.
  • Regulatory Compliance: Nidhi Companies are required to adhere to periodic auditing and reporting requirements. They must submit their financial statements, annual returns, and other mandated documents to the Registrar of Companies (RoC). Compliance with tax obligations and other legal formalities is essential.
  • Local Focus: Nidhi Companies operate within a specified district or area of operation. They are intended to serve the local community, promoting financial inclusion at the grassroots level.

It is important to note that although Nidhi Companies are regulated entities, they differ from commercial banks. Their operations are more restricted, and they primarily cater to a specific group of members within a limited geographic area.

Watch our YouTube video to learn about the Nidhi Company Registration.

Nidhi Company Registration Process:

Nidhi company registration online is a simplified process in this diverse digital world. The registration of a Nidhi company involves the following steps:

  • Minimum Requirements: To register a Nidhi company, a minimum of three directors and seven shareholders are required. All directors must have a Director Identification Number (DIN), and at least one director should be a resident of India.
  • Name Reservation: Choose a unique name for the company and apply for name reservation through the RUN (Reserve Unique Name) facility provided by the Ministry of Corporate Affairs.
  • Incorporation Documents: Prepare the necessary documents, including the Memorandum of Association (MOA) and Articles of Association (AOA) of the company. These documents outline the objectives, rules, and regulations of the Nidhi company.
  • Online Application: File an online application with the Registrar of Companies (RoC) through the Ministry of Corporate Affairs portal. The application should include all the required documents, such as identity proofs, address proofs, and the MOA and AOA.
  • Payment of Fees: Pay the prescribed fees for the registration process, which may vary based on the authorized capital of the Nidhi company.
  • Certificate of Incorporation: Once the application is processed and approved, the Registrar of Companies will issue a Certificate of Incorporation, officially recognizing the formation of the Nidhi company.

To Know More About Nidhi Company, Contact us at our toll-free no. - 1800121410410

Nidhi Finance Company Registration

Nidhi Finance Company Registration is the procedure through which a financial institution can establish itself as a Nidhi Company under the provisions of the Companies Act, 2013 in India. Nidhi Companies are non-banking financial organizations that primarily engage in accepting deposits and providing loans to their members, with the objective of promoting savings and thrift among them. The registration process entails fulfilling various legal requirements, including obtaining a minimum number of members, maintaining a specific net-owned fund, and ensuring compliance with the regulations prescribed by the Ministry of Corporate Affairs. Once successfully registered, a Nidhi Finance Company can operate within the legal framework, facilitating financial inclusion and delivering community-oriented financial services.

What are the charges of Nidhi Company Registration?

Nidhi companies, also referred to as mutual benefit societies, in India encourage savings and provide loans to their members. If you're considering the registration of a Nidhi company, it's important to be aware of the associated charges. Here is a general outline of the Nidhi company registration charges -

  • Government Fees: The registration process for a Nidhi company necessitates the payment of government fees. The exact amount of these fees may vary depending on the state, as registration is carried out with the Registrar of Companies (ROC) under the Ministry of Corporate Affairs (MCA). Typically, these fees are determined by the authorized share capital of the company.
  • Professional Fees: Engaging the services of a professional such as a chartered accountant or a company secretary to assist with the registration process is an option. These professionals charge fees for their expertise in preparing necessary documents, filing applications, and ensuring compliance with regulatory requirements.
  • Stamp Duty: Stamp duty is a fee imposed on specific legal documents, including the memorandum of association and articles of association, which are required during the registration process. The stamp duty charges differ based on the authorized share capital and the state where the company is registered.
  • Digital Signature Certificates (DSC): Digital Signature Certificates are essential for filing various documents online with the MCA. These certificates serve as a digital counterpart to physical signatures, ensuring the authenticity and security of online transactions. Charges associated with obtaining DSCs from certifying authorities.
  • Professional Tax: Some states levy a professional tax on the company or its directors. Professional tax rates vary across states and are based on factors such as the company's turnover or income and the number of directors.

It is worth noting that registration charges can vary based on factors such as authorized share capital, the state of registration, and the specific professional services enlisted. Get a free consultation from a professional or a legal expert like JR Compliance who can advise you on accurate and up-to-date information regarding the registration charges applicable to your particular circumstances. For more details regarding the Nidhi company incorporation and Nidhi company registration fees, kindly contact us at our toll-free number 1800121410410.

Operational Framework of a Nidhi Company:

Nidhis are entities registered under Section 406 of the Companies Act, 2013, or Section 620A of the Companies Act, 1956. They are supervised by the Ministry of Corporate Affairs (MCA). While NBFCs are subject to regulation by the Reserve Bank of India (RBI), Nidhis belong to a specific subset of NBFCs that receive partial regulatory oversight from the RBI, specifically concerning their deposit acceptance activities. Unlike Section 620A of the 1956 Act, the 2013 Act provides a comprehensive definition of Nidhi Companies. This definition was initially proposed by the Sabanayagam Committee on Nidhi.

The "Expert Committee" observed that Nidhis primarily operate within localized areas and predominantly serve the financial needs of the middle and lower-middle segments of society. Given the close familiarity among members, the committee recommended certain relaxations in the application of regulations that are typically imposed on NBFCs.

  • Membership: Nidhi Companies accept deposits from individuals by making them members of the company. These members contribute to the common pool of funds by purchasing shares and depositing savings.
  • Minimum Capital Requirement: A Nidhi company must have a minimum capital of Rs. 10 lahks ($14,000 approximately) to commence operations.
  • Core Activities: Nidhi companies primarily engaged in accepting deposits and lending money to their members. They also offer other financial services like recurring deposits, fixed deposits, and savings schemes.
  • Restrictions on External Funding: Nidhi companies are prohibited from raising funds from external sources such as banks or public deposits. The funds are generated solely from ‌contributions made by ‌members.
  • Dividend Distribution: Nidhi companies distribute dividends to their members based on their shareholdings. The dividend payout is generally limited to a reasonable percentage to ensure that a significant portion of the profits is retained for the benefit of the members and the company's growth.

Obtaining a Nidhi Company License:

Check out these essential pointers on how to get a Nidhi license - 

  • Compliance with Nidhi Rules: Ensure that the Nidhi company complies with the provisions specified in the Nidhi Rules, 2014. This includes maintaining the minimum capital requirement, adhering to the membership criteria, and fulfilling regulatory obligations.
  • Application Submission: Prepare and submit the license application along with the necessary documents to the Regional Director of the Ministry of Corporate Affairs.
  • Review and Approval: The Regional Director evaluates the application and supporting documents. If satisfied, they will grant the license to the Nidhi company.


Nidhi companies play a crucial role in promoting savings habits and providing financial support to members within a defined community. With their focus on serving the community's financial needs, these companies offer a reliable alternative to traditional banking services. By understanding the meaning, registration process, and operational framework of a Nidhi company, entrepreneurs can explore this avenue and contribute to financial inclusion.