What is NIDHI Company?

NIDHI stands for National Initiative for Developing and Harnessing Innovations. NIDHI Company is a financial institution or a type of NBFC that is involved in depositing and lending money to their members. This company is registered under the Companies Act, 2013 and is managed, as per the RBI’s guidelines. All the transactions are performed by the company’s members only. Since all the transactions are focused on the shareholders of the Nidhi Company, RBI has exempted the notified Nidhi companies from the core acts of RBI. This differentiates Nidhi companies from other NBFCs. Nidhi companies were started by the Ministry of Corporate Affairs (MCA) and are affiliated with the same. However, some of their decisions are controlled by the MCA.

Eligibility for NIDHI Company Registration

Given below is the eligibility criterion to fulfill before registering as a Nidhi Company:

  1. Apart from the core members, Nidhi companies must have a minimum of 200 shareholders of the company. Only when a company has this minimum number of shareholders, they can apply for Nidhi company registration.
  2. Any company wanting to register as a Nidhi company must have a minimum of Rs. 10 lakh of net-owned funds. This is necessary for the registration and must be followed. Any company having a lesser amount of net-owned fund is not eligible for Nidhi company registration.
  3. The ratio between the net-owned funds and the deposits cannot be more than 1:20 for any companies which want to register for Nidhi Company. A ratio more than this is not accepted for a Nidhi company registration.
  4. A company which wants to register as Nidhi Company must have a minimum 10% of unencumbered term deposits of the outstanding deposits. Term deposits more than 10% are acceptable but any less than 10% is not considered sufficient for Nidhi company registration.
  5. The name of the company must always contain ‘Nidhi Limited’.
  6. Companies registered under Nidhi company will be a public company.
  7. The registering company must have paid equity share capital of Rs. 5 lakh.

It is important to fulfill all of these requirements to register as a Nidhi Company with the Ministry of Corporate Affairs.

  • Easy-to-do registration
  • Even after being a different type of NBFCs, the registration process is comparatively simple for Nidhi companies.

2. No Compliance to RBI

As we suggested above, Nidhi companies do not have to comply with the RBI regulations. This non-compliance gives the company freedom to inculcate better and different rules for its functioning. Complying with RBI’s regulations would have made it difficult for Nidhi companies to formulate their own rules and regulations which is a major point which differentiates them from other NBFCs.

3. Less or No Risk

Since all the lending and depositing transactions are performed by members of the company, it lowers the financial risk taken by the company. In Nidhi companies, only the members are involved with the financial transactions which make it safe and easy to track with the person depositing or borrowing funds from the company.

4. Economical Registration

Nidhi company registration is not heavy on the directors’ pockets. The registration cost is less for Nidhi companies as compared to other types of NBFCs. Even the formation of Nidhi companies is simpler than other types of NBFCs. This acts as a major benefit for the directors since saving money on registration can make it possible for directors to invest money in various business related activities. This can also help the Nidhi companies to get business loans when required for the growth of the company.

5. Certainty on Savings

The basic objective of Nidhi companies is to promote the culture of savings among the people of India. This objective makes the concept of Nidhi companies certain and trustworthy. Nidhi companies make sure that they will never jeopardize the savings of their members where ever they invest. Savings is an important practice to be inculcated in the individuals of all age groups of the society.

6. Net-owned Funding System

Nidhi companies follow the net-owned funding system. Net-owned funding refers to the transaction where the owner invests an amount in the business to raise funds for the same. In Nidhi companies the ratio of net-owned funding is 1:20, which means if an owners invests Re. 1 in his/her business he/she can raise a fund of Rs 20 for his/her business. This feature of Nidhi companies makes it cost effective for owners to invest in new business ventures and grow their company with more capital and diversify their business.

Documents Required for NIDHI Company Registration

Given below is a list of documents one requires for Nidhi company registration:

  • Passport-sized photographs
  • No Objection Certificate (NOC) (signed by the landlord/owner)
  • Digital Signature (DSC)
  • Director Identification Number (DIN) of directors
  • Memorandum of Association of the company (MoA)
  • Articles of Association of the company (AoA)
  • PAN CARD : This is necessary for the filing of the financial transactions made by the company. PAN card is also necessary for the taxation process of the company
  • Address Proof
    1. Bank Statement
    2. Driving License
    3. Residence Card
    4. Any other Government issued identity proof having the address
  • Residential Proof
    1. Mobile Bill
    2. Telephone Bill
    3. Electricity Bill
    4. Bank Statement
  • Passport: Passports are only compulsory for the companies whose director is a foreign national. Passport is not a mandatory document for Indian directors of Nidhi companies
  • Registered Office Proof: Registered office proof for Nidhi company registration because of the importance of the same in the issue of government supported schemes and loans

It is important to note that Nidhi company registration application can be filled out online. Once the Nidhi company registration fee is fully paid, the registration form is submitted and sent for further processes of approval. Once submitted the Nidhi Company registration process is completed.

Forms to be filled

INC 9 – To be filed by all the subscribers to MoA
DIR 2 – To be filed by all the directors of the company, deceleration as per rule 5 & 6 of Nidhi rules 2014 – also to be signed by all the subscribers


Q1. Can Nidhi Company take deposits from a non-member?

Ans. No, all the financial transactions have to be made only between the shareholders of the company.

Q2. Are all the address proof documents necessary for Nidhi company registration?

Ans. No, any one of the address proof documents are to be submitted for the registration of Nidhi Company.

Q3. What document should I submit if I don’t own an office yet?

Ans. If you do not own an office but have an office on rent, you can submit your rental agreement and an NOC from the landlord for Nidhi company registration.