Establishing a Nidhi company symbolizes a shared commitment to fostering thrift and mutual financial support among members. But before you can start mobilizing member deposits and providing member-only loans, your entity must secure registration under Section 406 of the Companies Act, 2013 and adhere to the Nidhi Rules, 2014.
Nidhi company registration establishes a mutual benefit society under Section 406 of the Companies Act, 2013 and Nidhi Rules, 2014. It promotes thrift and savings by accepting deposits from, and lending to, members only, reinforcing financial inclusion.
- To qualify, incorporate a public limited company with “Nidhi Limited” suffix and a minimum paid-up equity share capital of ₹10 lakh.
- The Memorandum of Association (MoA) and Articles of Association (AoA) must reflect Nidhi objectives.
- At incorporation, a Nidhi needs at least three director-members and seven shareholder-members.
Benefits of Nidhi Company Registration
- Promotes disciplined savings among members by encouraging regular deposits and thrift culture
- Secure, low-risk lending, since loans are extended only to members and typically secured against collateral
- Separate legal identity with limited liability for members.
- Strong member accountability, driven by governance by elected directors and mutual benefit principles
- Tax advantages under relevant income-tax provisions.
Checklist / Document required for registration of Nidhi Company
- Ensure minimum seven members and three director-members.
- Obtain Digital Signature Certificates (DSC) and Director Identification Numbers (DIN).
- Secure name approval from MCA with “Nidhi Limited” suffix.
- Draft and file MoA/AoA reflecting Nidhi objects.
- Deposit ₹10 lakh as minimum paid-up equity share capital.
- Submit registered office address proof and member declarations.
- Other relevant forms
Nidhi company registration under Section 406 and Nidhi Rules, 2014 empowers member-driven financial services with streamlined compliance.
Need More Insights on Nidhi Company Registration
A Nidhi Company is a type of NBFC and it is formed with the aim of promoting a culture of saving and financial discipline among its members. It accepts deposits and provides loans exclusively to its members, ensuring mutual financial support. The company operates in accordance with the regulatory framework established by the Central Government for this category of institutions.
A Non-Banking Financial Company (NBFC) is a corporate entity registered under the Companies Act, 1956 or 2013, that primarily engages in financial activities such as lending, investing in securities, leasing, and hire-purchase. Unlike banks, NBFCs do not deal in agricultural or industrial operations, trade of goods (excluding securities), service provision, or real estate transactions.
Any Indian individual or legal entity—such as a company or partnership firm—may register a Nidhi company, provided they meet the eligibility criteria outlined in the Companies Act and Nidhi Rules.
No. Nidhi companies are strictly limited to accepting deposits only from their registered members. They are prohibited from soliciting or receiving funds from the general public.
To incorporate a Nidhi company, the following minimum conditions must be fulfilled:
- At least seven shareholders (members)
- A minimum of three directors
- Paid-up equity share capital of ₹5 lakhs
- A valid registered office address in India
Yes. It is mandatory for the word “Nidhi” to appear in the company’s name to clearly indicate its nature and ensure compliance with regulatory norms.
No. Nidhi companies are permitted to extend loans or advances only to their members. Lending to non-members is strictly prohibited under the governing rules.
Nidhi companies are regulated by the Ministry of Corporate Affairs (MCA). Although they fall under the category of Non-Banking Financial Companies (NBFCs), they are exempt from core Reserve Bank of India (RBI) regulations. However, the RBI retains the authority to issue directives concerning deposit-related activities.
Yes. A company already registered under the Companies Act can be converted into a Nidhi company by updating its objectives, complying with the relevant provisions, and obtaining approval from the Registrar of Companies (RoC).