Nidhi Company Registration

  • Ideal for lending and borrowing amongst members
  • Starting At Rs. 18,999 Onwards
  • (Takes 30-40 days)
  • You can start your Nidhi Company at about Rs. 25,000 only.

Grow Up Your Business With Us

The aspect that differentiates Nidhi Company from other companies/NBFCs etc. is that Nidhi assign with security from and loans to its members (shareholders) only, and works for the mutual benefits of its members. Accordingly, certain freedom have been give to these companies in respect of annual compliances and taxation.
Nidhi Companies in India are establish , governed, and controlled by Section 406 of the new Indian Companies Act of 2013, the Companies (Nidhi Companies) Rules of 2014, and the Chapter XXVI of the Companies Rules, 2014.
The purpose of incorporating a Nidhi Company is to motivate savings as well as providence amongst its members. To fulfill this purpose of prepare the habit of saving and thrift amongst its members. Nidhi companies are allowed to take a deposit from and lend to the members only. In other words, the funds contributed to a Nidhi company come only from its members (shareholders) and are to be used only by the shareholders of the Nidhi Company.
The name “Nidhi” in Nidhi Company means “treasure” and it arise from the Hindi vocabulary.
Nidhi Company is a certain class of NBFC. Though not directly controlled by the RBI, still RBI has powers to issue directives for them related to their deposit acceptance activities. Moreover, because these Nidhis deal with their shareholder-members only, they have been free from the core provisions of the RBI Act and other directions applicable to NBFCs. Therefore, Nidhi Company is an ideal legal entity to take a deposit from and lend to a specific group of people.

Procedure for Nidhi Company Registration

Though the procedure of registering a Nidhi Company is easy still, assistance from a professional is instruct to complete the various complex forms, filing them and within time. Moreover, the government portals and language are a bit on the hard side, too.
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Applying for DIN and DSCs

First, the Directors of the Nidhi company are to apply for DIN (Director’s Identification Number) and DSC (Digital Signature Certificate). DIN is issued by the MCA and DSC is a digital signature used for all e-filing processes. This step can be skipped for the Director who already has DIN and DSC.
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Name Approval

Now, you require to select and recommend 3 different names to MCA for your Nidhi Company. Out of these 3 names, only one will be obtained for your Company by MCA. The proposed names must be unique and not matching to the names of other already registered companies. As per Rule 8 of the Company Act. The approved name will remain valid for 20 days only.
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MoA & AoA

MoA(Articles of Association) and AoA (Articles of Association). These must mention the main purpose of incorporating a Nidhi company as a charity. The MoA and AoA are to be filed to the ROC (Registrar of Companies) with the subscription statement.
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Certificate of Incorporation (CIN)

It takes between 15-25 days to form a Nidhi company and get the incorporation certificate. This certificate declares that a company has been created and it mentions the company identification number (CIN) as well.
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PAN, TAN and Bank Account

Lastly, you require to register for PAN and TAN. The PAN and TAN are usually received within 7 working days. Later, you have to get a bank account opened by submitting the Certificate of Incorporation, MoA, AoA, and PAN to the bank.

Nidhi Company Registration

Section 406 of the Companies Act of 2013 and the Companies (Nidhi Companies) Rules of 2014 issue all the provisions regardings the incorporation and governance of the Nidhi Companies in India.
The recommendations and directives for the Nidhi Companies are also issued by the RBI. These are mainly connected to financial activities and investments by companies including the NBFCs.
Because of the reason that the Nidhi Companies are active in the business of deposits and loans by its members only, certain freedom have been gives to these companies, by the RBI.
The interest charged at the loans under a Nidhi Company is quite sensible. The aim these are sought are, generally, manufacturing/renovation of houses or child’s education, etc. The loans are issue against security only.
The deposits under Nidhis do not earn much interest as compared to deposits in the organized banking sector.
All loan and borrowing of the Nidhi Companies are done by its members, exclusively. Accordingly , such companies are also mention to as Mutual Benefit Societies. Because they work for the mutual benefit and welfare of all members.
If you are looking to begin a work in financing or loans in India, then Nidhi Company is the best choice for it..

Deposits & Loans

The Register of Companies (RoC) has issued naming principal for LLPs. You must follow the rules closely or your request may end up getting rejected , leading to a much longer procedure

Deposits under Nidhi Company

  • There are 3 types of deposit Nidhis can accept. These are Savings, Fixed Deposit (FD), Recurring Deposit.
  • Nidhi can pay a maximum interest of up to 12.5% on FD & RD and 6% on a savings account.
  • Nidhi can deposit up to 20 times the funds invested.

Loans from Nidhi Company

  • 3 types of securities can be accepted for loans on offer by Nidhi Companies. Loans can be provided against Gold, Property, Others (LIC, FD, etc.).
  • Nidhi cannot engage in the business of microfinance but can lend at up to 20% interest against security.
  • It can take legal action if a member fails to repay any sum of money.

Benefits Of Starting A Nidhi Company

The central aim behind organise a Nidhi Company is to inspire its members to save so that they can meet their financial needs arising from time to time easily. By being thrifty they become self-sufficient and would meet the future expenses that may come up. And the benefit of getting a company registered as Nidhi doesn’t end there.
There are many more edge to setup a Nidhi Company. Some are listed below:

Liability is Limited: Liability of Directors and shareholders of the Nidhi Company is limited. In case the company bear from any loss and faces financial suffer in the course of its business activity, the personal assets of any of the Directors or members are not at risk of being seized by banks, creditors, and government.
Less Regulations: Nidhi companies are controlled under the Nidhi Rules, 2014. The Central Government is the regulating authority manage its activities and operating. Directions force by the RBI on Nidhis are very few.
Better Credibility: Nidhi companies adore better credibility as opposed to any other members build organizations like Trusts, Cooperative Societies or NGOs.
Better Option for Savings : The main object of Nidhi Company’s incorporation is to motivate the habit of saving among the members of the Company. This is how it obtain the other aim of its registration of being mutually beneficial. The Nidhi Companies are to lend and borrow money to and from its shareholders/members only.
CARO: Essential of Companies Auditor’s Report Order or CARO do not request to this type of company.
Tax Benefits: For Section 8 Companies in India, many tax benefits are permit.
Easy Access of Public Funds: The loans from the Nidhi Company come at lower rate than loans from banks and other NBFCs. For its shareholders. And the process of get the loan and modify services are much more suitable and faster .
Micro Banking: Nidhis furnish banking services to the remote and rural public of India which still is based in far-off locations and is, hence, lacking of obtain finance from national banks and NBFCs.
Better Credit Co-operative Society: Nidhi Company is a close substitute for credit co-operative society. And, therefore, more selected by the small financer. Once a Nidhi company has been registered, the members can assist of all the benefits of credit co-operative society.
Simple Processing: Borrowing and advance to known persons, belonging to the same group, is much less confusing than dealing with banks, where the process is formal and secure.
Easy Registration Process: The procedure to register Nidhi Company with Insidetax is quite easy and clear. You don’t require to take any license from RBI. You just have to incorporate your company as a public limited one with the MCA.
Single Regulatory Body: After the alteration in Companies act 2013, Nidhi Companies are controlled by Nidhi Company Rules.
Low Capital Requirement: Ministry of Corporate Affairs (MCA) instruct that the minimum capital requisite of Rs. 5 lakhs for Nidhi. And, within 1-year, the capital has to be raised to at least Rs. 10 lakhs. The Fees, DIN, DSC & Other Expenses are approx. Rs. 25-30,000. These contain Government fees that differ from State to State.
Fulfilling the needs of Lower & Middle-income groups: Nidhi Companies play an main role in meeting the requirments of lower and middle-income groups by providing them financial help without composite rules and documentation.
Easier Eligible: People getting minimum wages and belonging to lower strata are generally inadequate to take loans from traditional banks because of their high eligibility criteria. For them, Nidhi Company is a good option to get finance because of rare circumstances.
No External Involvement: Nidhi Companies take funds from their members and further issue loans to their members only. All agreement are done within this group only. So, no external factors are affecting the working of these companies. The investors/members themselves supervise the functions of the company.
Separate Entity: Nidhi Company is a separate legal entity that can obtain assets and incur debts in its own name.

Requirements For Nidhi Company Incorporation

Given below are the required conditions that must be met with for registering or organise Nidhi Company.
Requirement before Registration

  • Minimum number of shareholders or members – 7
  • Minimum number of Directors -3
  • The minimum capital requirement is of Rs. 5 lakhs
  • DIN for Directors
  • Minimum 3 Directors.
  • No Preference Shares shall be issued.
  • The objective of the company shall be cultivating the habit of saving by receiving deposits from and lending to its members only for their mutual benefits.
  • Requirement after Registration
  • By the end of the 1st year, the number of members or shareholders of the Nidhi Company must be 200 at least.
  • NOF should be more than Rs. 10 lakhs.
  • The ratio for NOF to Deposit should be more than 1:20.
  • Unencumbered deposits should exceed 10 % of outstanding deposits.

Documents Required

  • Passport Sized photographs of all the directors

  • ID proof of all the designated directors and shareholders. (PAN card and Passport are valid).

  • Address proof of all the directors and members (Ration Card, Aadhaar Card, Passport, Voter ID, and Utility Bill – electricity/water/mobile).

  • Copy of the Property papers (if the property is owned).

  • NOC (No-Objection-Certificate) from the owner (if the property is rented).

Compliances For Nidhi Company

NDH-1 Form: A Nidhi Company has to submit the list of members within 90 days from the end of every financial year, in this Form.
NDH-2 Form: It can appeal MCA for an addition in this Form, in case it has not been able to add 200 members in its first financial year.
NDH-3 Form: Other than the above NDH-1 Form, a half-yearly return is also needed to be filed in NDH-3 Form.
Annual Returns with ROC: The Nidhi Company has to register its Annual Returns with MCA through Form MGT-7.
Profit & Loss Statement and Balance sheet: The financial statements and other associated documents are to be submitted, yearly in Form AOC-4.
Income Tax Returns: Nidhi Company, like all other businesses, must register its Annual Income Tax Returns by 30th September of the following financial year.

What Is Included In Our Package?

  • DIN for 3 Directors

  • MOA/AOA

  • Digital Signature For 3 Directors

  • Registration Fees

  • Name search & approval

  • Company Pan Card

Restrictions On Nidhi Company

  • Advertise themselves to invite deposits
  • Chit funds
  • Leasing Finance
  • Hire-Purchase finances
  • Lotteries
  • Insurance
  • Sell, pledge or mortgage the assets kept with it as security for a loan
  • Getting into a partnership for carrying out lending and borrowing activities
  • Taking deposits or lending funds to someone other than its shareholders
  • Issue preference shares, debentures or any other debt instruments
  • Issue equity shares of the nominal value of over Rs. 10/- each
  • Provide its deposit holders equity shares exceeding 10 or shares of the value of more than Rs. 100/-
  • Open a current account with its members (though it is allowed to open a Savings Account)
  • Lend to or take a deposit from a corporate
  • Pay commission, fee or incentive for mobilizing deposits
  • Carry on any other business than borrowing and lending to its members
  • Hire a Purchase Financer
  • Pay any brokerage for granting a loan to its members

Key Features

  • Some points about the working of Nidhi Companies in India, as disclose in Rule-6 of the Nidhi Rules of 2014, are important to note:
  • It cannot carry any of the following kinds of transactions. Such as leasing finance, hire purchase finance, chit fund, insurance, or additions of securities provide by any corporation.
  • It cannot receive deposits from or give loans to some external individual or corporation.
  • A Nidhi Company is not authorize to issue preference shares, debentures, or some other debt instruments in any form.
  • Companies Act 2013 and Nidhi Rules 2014 are the conducting bodies regulating the purpose and fuctions of Nidhi Company in India.
  • Nidhi Company does not come under the purview of RBI. Therefore, Nidhi does not require any license from RBI to function a loan business.
  • It is not permit to execute vehicle finance business or microfinance business in India.
  • Within 12 months of registration, the number of members should be at least 200.
  • A maximum interest rate of 20% p.a. (calculated by the reducing balance method) can be imposed.
  • The maximum rate of interest that can be provide on saving deposit account shall not exceed 2% above the rate provide by Nationalised Banks.
  • Nidhi Company can obtain FD, RD & savings and can earn an interest of 12.5% currently.
  • Rate of Interest that can be provide on Fixed and Recurring Deposit shall not exceed the maximum rate of interest autorize by RBI for the NBFCs to offer on their deposits. The maximum limit of the rate of interest for NBFCs is also relevent to the Nidhi companies.
  • Operations limited to district level for the first 3 Years. After completion of 3 years, 3 offices can be set up within the same district. For extension out of the district, prior acceptance from the Regulator Director is essential.
  • It can only provide loans against security. These securities may be Gold, Property, Fixed Deposits, Government Securities or Life Insurance Certificates.
  • Unencumbered deposits (Deposits not offered as securities for any purpose) should not be less than 10 % of outstanding deposits.