FAQ For Nidhi Company Registration

Overview of Nidhi Company

•        Nidhi Company is a type of Company which belongs to the Non-banking Finance sector.

•        Nidhi Company has been recognized by the Companies Act, 2013 also.

•        This type of Company is also known as Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company.

•        Likewise other companies they are also regulated by Ministry of Corporate Affairs.

•        Reserve Bank of India is empowered to issue directions to these companies in matters relating to acceptance of a deposit.

•        They are somewhat similar to NBFC but the basic difference is the funds contributed by Nidhi Company are from its members.

•        They are governed by Nidhi Rules, 2014.

•        They are incorporated into the nature of Public Limited Company so they have to comply with the rules mentioned in the Companies Act, 2013 as well as Nidhi Rules, 2014.

•        As RBI has exempted Nidhi Companies to comply with its core provisions. So no RBI approval is necessary to register the company.

•        The only provision of RBI which is applicable to Nidhi Companies is the ceiling on interest rate payable on deposits.

•        Nidhi Companies are barred from making advertisement in any manner.

Restrictions on Nidhi Company

As per the Nidhi Rules, 2014 there are some activities which are not allowed by Nidhi Companies and they are:

•        Nidhi Companies are not allowed to carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities which is issued by any other body corporate.

•        They are not allowed to issue debentures or any debt instruments in any form or issue preference shares.

•        They are not allowed to acquire any other company unless they have obtained the approval of Regional Director.

•        They are not allowed to carry on any business activity other than borrowing or lending.

•        They cannot provide vehicle loan.

•        They shall not accept deposits from any other person except its members.

Nidhi Company Registration

Procedure for Incorporation of Nidhi Company:

1.       As the first step of Nidhi Company Registration is to incorporate a Limited Company. This Public Company is to be incorporated as per the rules of Companies Act, 2013. 

2.       Hence, a minimum number of 3 Directors and seven members are required to incorporate a Nidhi Company.

3.       The object to be mentioned in the Memorandum of Association of Nidhi Company should be to cultivate the habit of thrift and saving among its members, receiving deposits from its members and lending to its members for their mutual benefit.

Requirements for Incorporating a Nidhi Company:

•        Minimum paid-up Equity Capital Rs. 5, 00,000.

•        It should have at least 200 Hundred members/shareholders.

•        Should have net owned funds of Rs. Ten Lakhs.

•        The unencumbered Deposit of the Company should not be less than 10% of the outstanding deposit.

•        Net owned Funds to deposits ratio should not be more than 1:20.

4.       The Nidhi Company satisfying the above conditions required for incorporating a Nidhi Company shall within 90 days from the close of 1st Financial Year or 2nd Financial Year (as may be applicable) file a Return of Statutory Compliances in Form NDH-1.

5.         In case the company is not able to meet the requirement the company shall within 30 days from the date of close of 1st Financial Year apply to Regional Director in Form NDH-2.