CA Desk

Nidhi Company Registration

An excellent option for people looking to save money and lead a thrifty lifestyle.

    Who Should Register For A Nidhi Company?

    It’s ideal for those businesses looking to start a permanent and a mutual benefit fund, or a mutual benefit company.

    One DSC & three DINs

    The directors must be registered with the MCA

    Company Name Reservation

    Deciding on a company name and registering it

    RBI Approval

    Principle approval from
    RBI

    One DSC & three DINs

    The directors must be registered with the MCA

    Company Name Reservation

    Deciding on a company name and registering it

    RBI Approval

    Principle approval from
    RBI
    Overview Benefits Checklist 10 Things Procedure Documents Required Why CADesk Insia? Recent Updates FAQs
     
    What is Nidhi Company?

    It is a company classified as an NBFC (a Non-banking financing company) and registered under Section 406 of Companies Act, 2013. The main business of such a company is to facilitate lending money between the core members of the company. This way members (or shareholders) are encouraged to save money and invest them within the company. These deposits are then used by the company for its members (or shareholders), to provide loans or advances, and to acquire government-issued stocks/bonds/debentures/securities. It is regulated by the Ministry of Corporate Affairs, while the RBI monitors all its financial dealings.

     

    Benefits of a 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 incorporation enables its members to unlock the potential of their money and gain from lower interest rates when they require money themselves.

     
    Checklist For A Nidhi Company
    • At least seven members are mandatory to form a Nidhi company. Out of these, three should be designated as the directors. However, it should acquire a minimum of 200 members within one year of commencement.
    • Moreover, the company should have a minimum equity share capital of Rs 5 lakhs, for nidhi company registration process. This entire amount has to be paid up. However, the Net Owned Funds (NOF) must be increased to Rs 10 lakhs within a year of Nidhi Company Incorporation.
      • a.At least 10% of its outstanding deposits should comprise of un-encumbered term deposits.
      • b.The prescribed NOF to deposits ratio should be 1:20.
      This includes equity share capital and free reserves and excludes accumulated losses as well as intangible assets.
    • At least 10% of its outstanding deposits should comprise of un-encumbered term deposits
    • The prescribed NOF to deposits ratio should be 1:20. where 10% of the total deposits are in a fixed deposit account of a nationalized bank.
     
    What are the 10 things Nidhi Companies cannot do as an NBFC ?

    A nidhi company registration cannot deal in the following –

    • Chit fund business
    • Hire purchase finance
    • Acquisition/insurance of securities issued by any corporate
    • Engaging as an NBFC in the business of advances or loans
    • Leasing finance
    • Acquisition of stocks/shares /bonds/securities/debentures issued by any local authority /Govt./marketable securities
    Process for e_Nidhi Company Registration with Vakilsearch

    Contrary to what you might think, registering a Nidhi Company is a simple 3-Step process and can be done completely online. We’ve laid it out below.

    • Name Reservation – We help you reserve your name with MCA.
    • DSC and DINs – We help you get 1 DSC and 3 DINs.
    • Documents and approval – We help you at every stage of the documentation process and in getting in-principle approval from the RBI.
     
    Documents Required for Nidhi Company Registration Online

    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
    Access To Experts

    We provide access to reliable professionals and coordinate with them to fulfill all your legal requirements. You can also track the progress on our online platform, at all times.

    Realistic Expectations

    By handling all the paperwork, we ensure a seamless interactive process with the government. We provide clarity on the nidhi company registration process to set realistic expectations.

    300-Strong Team

    With a team of over 300 experienced business advisors and legal professionals, you are just a phone call away from the best in legal services.

    17th March: Stringent compliance norms for Nidhi Companies

    To protect the interest of investors, the Ministry has advised them to verify a Nidhi Company status before pumping in money. They can verify it from the notification in the official gazette.

    21st March: Time-frame for filing Form NDH-4

    To enhance transparency and investor-friendliness, Nidhi companies are now instructed to follow the time frame for applying in Form NDH-4. In case of non-compliance, a Nidhi Company will not be allowed to file Form No SH-7 and Form PAS-3

    FAQs on Nidhi Registration

    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, the Registrar of Companies need to intimated 30 days prior to their opening.

    The conditions laid down by the Act says that a Nidhi Company should acquire a minimum of 200 members within its first year of incorporation. However, in case the company is not able to meet the required numbers, it can apply for an extension with the necessary government authorities.

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

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

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

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    CA Desk is a team of highly professional CA, CS, Lawyers who driving towards the integration of technology with traditional practices to cater to the need of MSMEs in the fast-moving and cost-effective world.

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