A Nidhi company is a type of non-banking finance entity recognized under Section 406 of the Companies Act, 2013. The main objective of this form of company is borrowing and lending money among its members. They are also known as benefit funds, permanent funds, mutual funds, and mutual benefit fund businesses. In India, Nidhi companies are governed by Ministry of Corporate Affairs, The primary goal of these organizations is to instill in their members the value of saving money and being thrifty.


  • These form of companies are governed by Nidhi Rules, 2014 and by Ministry of Corporate Affairs.
  • Nidhi Companies are in form of public Limited companies.
  • They must add the words "Nidhi Limited" at the end of their name.
  • The main objective of Nidhi Company is to conduct all loan and borrowing activities in-house, with no third-party involvement.
  • During the fiscal year, the rental income should not exceed 20% of the total income of the company.

Conditions for Forming Nidhi Corporations in India:-

The following conditions are provided by the Governing Authority for the incorporation of a Nidhi Company in India:

  • Minimum number of members: 7 (three of whom should be designated directors).
  • Rs. 10 lakhs as a minimum equity share capital
  • You must have limited company status this is the one of the pre requisite of incorporating Nidhi Companies
  • The mandatory inclusion of the Company's object in the MOA demonstrates the Company's goal to instill in its members’ the habit of thrift and saves.


  1. Obtain DSC and DIN from MCA-approved vendors.:-

For incorporating these form of companies initial step is to obtain the Digital Signature certificate for each and every proposed members and directors. The aforementioned agencies charge regular costs for such services and require simple documents. DSC is usually used to authenticate documents electronically. It is, by far, the most secure and legitimate method of signing e-forms and other documents.


In lieu of name approval one must submit four unique name for their Nidhi Company to the MCA, and out of one of these submitted name one will be accepted. Nidhi Company's name should be distinctive. This approved name is only valid for 20 days.

  1. Registration Application:-

Following approval of the name, the directors are required to submit an application for registration with the Articles of Association (AOA) and Memorandum of Association (MOA).

  1. Incorporation Certificate:-

The competent authorities grant a certificate for the incorporation of a Nidhi Company in 15-20 days. The certificate also includes the Company Identification Number (CIN).


  • DIN
  • NOC
  • MOA
  • AOA



  • Simple Formation:- The formation of a Nidhi Company is a relatively straightforward procedure. There are specific prerequisites for the formation of Nidhi Company, such as a minimum of seven members, three of whom will be appointed as directors, and an uncomplicated and hassle-free documentation process.
  • Failure to comply with the Reserve Bank of India:-

As it is governed by MCA (Ministry of Corporate Affairs) Nidhi Company are not required to follow any Reserve Bank of India criteria.

  • Lower Risk:-

Transactions such as lending, borrowing, and depositing are carried out only by members, eliminating the risk of any financial issues in the Nidhi Company.

  • Savings assurance:-

The premise and goal of a Nidhi Company are to promote saving among Indians.

  • Cost-effective Registration:-

As compare to cost of incorporating of any other financial entity, Nidhi companies are must cheaper in cost and registration process are more simpler than other.


  • No company shall raise a deposit or make a loan to any of its members if the following conditions are met.
  • It does not comply with the norms or requirements of the Nidhi firm New norms,
  • If central government has rejected the application in Form NDH -4,
  • Nothing in these regulations, however, shall apply to any business incorporated on or after the implementation date of the Nidhi business New regulations. Any public company that wishes to be declared as a Nidhi firm must submit an application in Form NDH-4 within 120 days of its incorporation, after completing the following conditions:

                (i) it has at least 200 members

                (ii) it has at least Rs. 20 lacs in net owned funds.

  • After reviewing the application, the central government informs the company of its decision within 45 days; if the company does not respond within 45 days, it is presumed to be granted.

            However, the Company will not be able to begin operations unless the central government approves its proposal.

  • The required minimum paid-up share capital has been increased from 5 lakhs to 10 lakhs.
  • Nidhi companies that exist on the date of the implementation of the Nidhi Company New Rules must comply with all requirements within 18 months of the date of such enforcement.
  • The requirement to file the application in Form NDH 1 within 90 days of the Company's formation shall not apply to firms formed on or after the implementation of the Nidhi Company New Rules.
  • The net owned funds requirement for Nidhi firm has been increased from 10 lakhs to 20 lakhs.


  • Open the bank Current Account with Company Name in 30days
  • Directors must produce a declaration stating that the subscribers contributed to the capital specified in the MOA within 180days of incorporation.
  • Hold a board meeting to file an application with the central government for recognition as a Nidhi firm within 30days of incorporation.
  • The central government for certification as a Nidhi firm in 60days.
  • It must notify the company in the official Gazette that it is a Nidhi or mutual benefit association in 45days.
  • The first fiscal year following incorporation, if relevant. In the second fiscal year, file a statutory return in 90days.


  • Regional Director's Application:-  Application for a timeframe extension due to failure to meet member and deposit requirements after incorporation.
  • Return of the Half-Year Ended:- Every Nidhi corporation is required to file a half-yearly return with the Registrar.
  • Companies' Accounts: - Every corporation is required to file a balance sheet at the AGM.
  • Annual Return :- Every private limited corporation is required to file an annual return of operations and annual general meeting.
  • Director’s KYC:- The DIN KYC procedure must be performed for each fiscal year by the company's directors.
  • Income Tax Return:- Companies incorporated in India and engaged in profit-making activities

DPT-3:- This return contains information regarding deposits and/or outstanding loan or money-other-than-deposits receipts.