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).