What is Nidhi Company Registration in India ?

Kamal AhmadSeptember 12, 2025

0 3 6 minutes read

Introduction

Starting a business in India can be exciting yet challenging—especially if you want to run a finance-related company. One of the simplest and most cost-effective ways to start a financial services business is by registering a Nidhi Company.

Nidhi Company Registration offers small businesses and entrepreneurs an opportunity to accept deposits and lend money to their members, promoting savings and financial discipline within a close group. It is ideal for people who want to create a small cooperative-like financial institution under legal compliance.

In this guide, we will cover everything you need to know about Nidhi Company Registration in India—including its meaning, features, legal requirements, documents, step-by-step registration process, and key benefits.

What is a Nidhi Company?

A Nidhi Company is a type of Non-Banking Financial Company (NBFC) recognized under Section 406 of the Companies Act, 2013 and regulated by the Ministry of Corporate Affairs (MCA).

Its primary objective is to cultivate the habit of savings among its members and to lend and borrow funds only from its members.

Key characteristics of a Nidhi Company:

Works only with its members (no outsiders allowed)
Cannot carry out any business other than lending and borrowing between members
Does not require a license from the Reserve Bank of India (RBI)
Must have “Nidhi Limited” in its name

Legal Framework Governing Nidhi Companies

Nidhi Companies are governed by:

Companies Act, 2013
Nidhi Rules, 2014 (issued by MCA)
Companies (Registration Offices and Fees) Rules, 2014

They are classified as NBFCs but are exempted from RBI’s core provisions because they deal only with members and not the general public.

Eligibility Criteria for Nidhi Company Registration

To start a Nidhi Company in India, you must meet the following basic eligibility conditions:

Must be incorporated as a Public Limited Company
Minimum 3 Directors
Minimum 7 Members (Shareholders)
Must have minimum paid-up equity share capital of ₹5 lakh
Must include “Nidhi Limited” as part of the company name

Post-incorporation requirements (within 1 year):

Minimum 200 members
Net Owned Funds (NOF) of at least ₹10 lakh
Unencumbered deposits of at least 10% of outstanding deposits
Ratio of Net Owned Funds to deposits not more than 1:20

Documents Required for Nidhi Company Registration

Here is a list of documents you need to submit during the registration process:

For Directors and Shareholders

PAN Card
Aadhaar Card / Voter ID / Passport / Driving License
Passport size photos
Bank statement or utility bill (not older than 2 months) for address proof

For Registered Office

Rent agreement or property ownership document
NOC (No Objection Certificate) from property owner
Latest utility bill (electricity/water bill)

Step-by-Step Process of Nidhi Company Registration

Here is the detailed procedure to register a Nidhi Company in India:

Step 1: Obtain Digital Signature Certificates (DSC)

Each proposed director must obtain a valid DSC to digitally sign incorporation documents.

Step 2: Apply for Director Identification Number (DIN)

Next, apply for a DIN for all proposed directors via the MCA portal.

Step 3: Reserve Company Name

Use the RUN (Reserve Unique Name) service on the MCA website to get approval for your company’s name. The name must end with “Nidhi Limited.”

Step 4: File Incorporation Documents (SPICe+ Form)

Prepare and file the following incorporation documents with the Registrar of Companies (ROC):

SPICe+ form (INC-32)
MoA (INC-33)
AoA (INC-34)
AGILE-PRO-S form for GST, ESIC, EPFO registration (optional)

Step 5: Get Certificate of Incorporation (COI)

If the Registrar finds the documents in order, they will issue the Certificate of Incorporation, which includes your company’s Corporate Identity Number (CIN).

Step 6: Apply for PAN and TAN

After incorporation, apply for your company’s PAN and TAN to open a bank account and handle tax-related matters.

Step 7: Post-Incorporation Compliance

Within 1 year, ensure:

Minimum 200 members
Net Owned Fund of ₹10 lakh
File NDH-1, NDH-2, and NDH-3 returns as per Nidhi Rules

Restrictions on Nidhi Companies

While Nidhi Companies enjoy several benefits, they also face certain restrictions:

Cannot deal with non-members
Cannot issue preference shares, debentures, or any other securities
Cannot engage in chit fund, hire purchase, leasing, or insurance business
Cannot accept deposits or lend money to companies, trusts, or individuals who are not members

Benefits of Registering a Nidhi Company

There are several advantages of registering as a Nidhi Company in India:

1. Easy and Affordable Formation

Requires only 7 members and 3 directors
Low minimum capital requirement (₹5 lakh)
Simple and quick incorporation process

2. No RBI Approval Required

Unlike other NBFCs, a Nidhi Company doesn’t require a license from the Reserve Bank of India, reducing regulatory burden.

3. Encourages Savings

It promotes the habit of saving and responsible lending among its members, which can create a strong financial community.

4. Limited Liability

Members and directors enjoy limited liability protection, which means their personal assets are safe.

5. Separate Legal Entity

A Nidhi Company is treated as a separate legal entity, allowing it to own assets, enter contracts, and sue or be sued in its own name.

6. Better Credibility

Being registered under the Companies Act improves the credibility and trustworthiness of the business.

Post-Registration Compliance for Nidhi Companies

After registration, a Nidhi Company must comply with the following ongoing requirements:

Maintain at least 200 members within one year
Maintain Net Owned Fund of ₹10 lakh or more
Maintain a NOF to deposit ratio of 1:20
File NDH-1 (initial return) within 90 days from incorporation
File NDH-2 (application for extension, if needed)
File NDH-3 (half-yearly return)
Maintain proper books of accounts and get them audited annually
Conduct regular board and general meetings

Non-compliance can result in penalties, disqualification of directors, or even cancellation of the company’s registration.

Common Mistakes to Avoid During Nidhi Company Registration

Not arranging enough initial members (minimum 7)
Choosing a name without “Nidhi Limited”
Submitting incomplete or incorrect documents
Ignoring post-registration compliances
Mixing Nidhi activities with other businesses

Avoiding these mistakes ensures smooth registration and operation of your Nidhi Company.

Difference Between Nidhi Company and NBFC

Aspect	Nidhi Company	NBFC
Regulation Authority	Ministry of Corporate Affairs (MCA)	Reserve Bank of India (RBI)
Dealings	Only with members	With public/customers
License Requirement	No RBI license needed	RBI license mandatory
Objective	Encourage savings & lending among members	Provide financial services
Complexity	Easy and low cost	More complex and costly

Who Should Register a Nidhi Company?

A Nidhi Company is ideal for:

Entrepreneurs who want to start small financial institutions
Professionals aiming to build community-based lending platforms
Groups of people who want to encourage savings among themselves
Small businesses looking to provide loans to their members at lower interest rates

Conclusion

Nidhi Company Registration in India is one of the simplest and most cost-effective ways to start a financial services business for a close group of people. It helps promote the habit of savings, offers legal recognition, and reduces regulatory burdens compared to NBFCs.

However, it is crucial to follow all eligibility conditions, submit correct documents, and comply with post-registration requirements to avoid penalties.

If you are planning to start a small-scale finance business within a community or group, registering a Nidhi Company can be a smart and strategic decision.

FAQs on Nidhi Company Registration

Q1. How long does it take to register a Nidhi Company in India?
Usually, it takes 20–30 working days, depending on the ROC approval process and document readiness.

Q2. How many members are required to start a Nidhi Company?
You need a minimum of 7 members and 3 directors at the time of incorporation.

Q3. Can a Nidhi Company accept deposits from the public?
No. A Nidhi Company can accept deposits and lend money only to its members.

Q4. Is RBI approval required to start a Nidhi Company?
No, RBI approval is not required, but the company must comply with Nidhi Rules, 2014.

Q5. What is the minimum capital requirement for Nidhi Company registration?
A Nidhi Company must have at least ₹5 lakh paid-up equity share capital at incorporation.