Nidhi Company


It is a kind of company whose main objective is to encourage and cultivate the habit of savings among members of the company itself. Main work of the Nidhi company is borrowing and lending money to members only. This company is registered under Section 406 of Companies Act, 2013. The funds are contributed within a company only from its members to its members. 

Background of the Nidhi company is the Non-banking  Indian finance sector. RBI has exempted Nidhi company from its regulations and directions applicable on NBFCs.

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  • Objectives

    • Savings – A Nidhi company has the right to open Savings bank account of its members to promote & encourage their habit of saving. 

    • Fund – Nidhi company can also raise funds. Nidhi company is safest way to raise funds as it has been done from general public through RDs, FDs and deposits.

    • Loan – Nidhi company can lend money to its members only. They can only provide secured loans and not unsecured loans. 

    • Micro banking – There are some remote areas which do not have nationalised banks and NBFCs. Nidhi company provides banking services at these places.


  • Advantages

    • Perpetual succession

    • Better credibility

    • Easy loan with minimum eligibility criteria

    • Financial assistance is  provided  by least formalities and minimum documentation.

    • Process  of lending and borrowing of money is restricted to the members of company itself. No external involvement is there. 

    • Liability of directors & shareholders of company is limited liability.


  • Requirements

    • Company name must have suffix – Nidhi Limited

    • Minimum paid up capital is Rs. 5,00,000/-

    • Nidhi Company cannot issue preference shares

    • Objective must be to develop habit of saving and services of this company is restricted to its members only

    Certain conditions needs to be fulfilled by Nidhi company within period of one year of incorporation : 

    • Minimum number of directors – 3 

    • Minimum number of shareholders – 7 

    • Minimum number of members of company – 200

    • Net owned funds – Rs. 10 lakhs or more

    • Unencumbered deposits – 10 percent or higher (of outstanding deposits)

    • Ratio of deposits -not more than 1:20 of net owned funds


  • Documents

    • Identity proof of all Directors of company

    • Address proof of all Directors of company

    • Address proof of registered office of company

    • Utility bill 

    • Bank statement of all Directors of company

    • Certificate of Trademark registration


  • Registration

    Step 1 : It is required to apply for a Digital Signature Certificate of all the partners of the company. For submission of documents of registration, Digitally signed documents are necessary.

    Step 2 : Application for Director Identification Number must be made under Form DIR-3.

    Step 3 : Approval of Company’s name is an important step for establishment of the company. For the reservation of Company’s name Reserve Unique Name form is required to fill. 

    Step 4 : Drafting of MOA & AOA  has to be done under form INC 33 and INC 34.

    Step 5 : For incorporation of any private limited company, forms INC 33, INC 32 and AGILE must be filled with SPICe form INC 32. These forms need to be submitted with the Registrar of companies of state where the registered office of the company is established.

    Step 6 : After the approval of SPICe form INC 32 registrar will provide Company Identification Number  to Nidhi company along with the PAN & TAN of the company.


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