Overview
A Nidhi Company is a type of non-banking finance company formed under Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014, whose main purpose is to encourage saving and thrift among its members. It can accept deposits from and lend only to its own members, and cannot deal with the general public. A Nidhi is incorporated as a public limited company and must meet member and net owned fund requirements within a set period after incorporation. It is a member-focused mutual benefit structure that does not require a separate RBI licence.
Objective
To incorporate a mutual benefit company that promotes saving and lending among its own members under the Nidhi Rules, 2014.
Characteristics
- Incorporated as a public limited company with Nidhi as its object
- Accepts deposits from and lends only to its members
- Cannot carry on chit fund, hire purchase, or insurance business
- Must add the words Nidhi Limited to its name
- Governed by member and net owned fund thresholds prescribed by the Nidhi Rules
Eligibility
- Minimum seven shareholders and three directors at incorporation
- Formed only as a public limited company
- Must attain the minimum number of members prescribed within the timeline in the Nidhi Rules
- Must maintain net owned funds as prescribed by the Nidhi Rules
- Objects limited to cultivating saving and thrift among members
Governing law
- Companies Act, 2013 (Section 406)
- Nidhi Rules, 2014
- Ministry of Corporate Affairs (MCA)
- Registrar of Companies (ROC)
The process
- 1Obtain digital signatures and director identification
Proposed directors obtain Digital Signature Certificates and Director Identification Numbers required for electronic filing with the MCA.
- 2Reserve the name with Nidhi identity
A suitable name ending with Nidhi Limited is reserved through the MCA portal, reflecting the object of promoting thrift and savings.
- 3Incorporate the public company
The SPICe+ incorporation application is filed with the Memorandum and Articles that specify the Nidhi objects, along with director and subscriber declarations.
- 4Meet post-incorporation requirements
After incorporation the company works to reach the prescribed number of members and net owned funds and files the applicable NDH forms with the Registrar within the timelines set by the Nidhi Rules.
Documents required
- PAN and identity proof of directors and shareholders
- Address proof of directors and shareholders
- Proof of registered office and utility bill
- No Objection Certificate from the premises owner
- Digital Signature Certificates of directors
- Memorandum and Articles of Association with Nidhi objects
Benefits
- Promotes saving and thrift among a defined group of members
- No separate RBI licence required to operate as a Nidhi
- Limited liability protection for members
- Lower risk profile as dealings are restricted to members
- Structured governance under the Companies Act and Nidhi Rules
Frequently asked questions
Can a Nidhi Company accept deposits from the general public?
No, a Nidhi Company can accept deposits only from its members and can lend only to its members. It is not permitted to deal with the general public or with non-members.
Does a Nidhi Company need an RBI licence?
A Nidhi Company does not require a separate licence from the Reserve Bank of India to operate, as it is regulated primarily under the Companies Act, 2013 and the Nidhi Rules, 2014. However, it must comply with the member and net owned fund conditions and file the prescribed NDH forms with the Registrar of Companies.