All Aspects of Nidhi Company | Procedure | Loan | Branches

Nidhi Company is a non-banking financial structure based on the mutuality principle. Which means the borrow and lending of money are done between its members. These companies are popular in the southern part of India. Nidhi Company isn't required to get a license from the Reserve Bank of India. Thus, it is easy to operate and form. It is registered as a public company.

With increasing complexities in the investment sector, small households find difficulties in borrowing and lending money. To address this issue and assist small households, the concept of Nidhi Company was inaugurated. The word Nidhi means ‘treasure’. The sole purpose of this company to borrow and lend money only to its members. As the concept of Nidhi Company is quite distinct from other corporations there are certain essentials points which should be kept in mind before becoming a member of Nidhi Company.


•    Nidhi Company is incorporated as a Public Limited Company.

•    The sole purpose of the Nidhi Company to cultivate the thrift and savings amongst its members, receiving a deposit from and lending money to its members only.

•    It is mandated to have at least 200 members to incorporate Nidhi Company.

•    Further, within a 1 year of its incorporation, the NOF would be Rs. 10 lac. And the ratio of NOF would be 1:20 respectively.

•    It shall have a minimum paid up equity shares capital of Rs. 5,00,000/-

•    It should have the word “Nidhi Limited” as a part of its name.

Documents required for the Nidhi Company registration:

•    Proof of the registered place of business (Ownership documents/ rent or lease agreement)

•    No Objection Certificate (signed by the owner/ landlord)

•    Identity proofs

•    Address proofs of the members

•    Photos of the members

•    PAN card copies of the members

•    Digital Signature (DSC)

•    Director Identification Number (DIN) of the directors

•    Memorandum of Association of the company (MoA)

•    Articles of Association of the company (AoA).

Forms to be filled:

There are two forms which are required to fill.

•    INC 9.

•    DIR 2.

Applicability of the Nidhi Company Registration?

•    Every company which had been declared as a Nidhi under section 620A of Companies Act, 1956.

•    Every company functioning on the line of a Nidhi but has either not applied for or has applied for and is awaiting notification to be Nidhi company under section 620A of Companies Act, 2013.

•    Every company incorporated as a Nidhi Pursuant to the provisions of Section 406 of the Companies Act, 2013.

If Nidhi companies satisfy all above-mentioned information, it should be filled NDH-1 along with prescribed fees within 90 days from the end of the financial year after incorporation. The form must be duly certified by practicing CA/CS/CWA.

General Restriction of Nidhi Company:

A Nidhi is restricted from undertaking any of the exercises expressed below;

•    To attempt the matter of chit funds, hire purchase, renting money, insurance or procurement of securities.

•    To issue preference shares or debentures.

•    To open the current account of the member.

•    To accept deposit or loan cash to any individual other than its individuals.

•    To issue any sort of advertisement.

•    To go into any understanding or pay financier to request any sort of deposits.

•    Pledging any of the advantages put together by its very own individuals as security.

•    Pay any brokerage or incentives for mobilizing deposits from members or for granting loans.

•    Charge rates of interest exceeding 7.5% respectively.

•    Not declare dividend exceeding twenty-five percent.

•    Enter into a partnership of borrowing money and securities.

Deposit and its Acceptance:

A company shall accept the deposit only on compliance with the following conditions;

•    Company doesn’t accept the deposit if it is more than twenty times its NOF.

•    The fixed deposit shall be accepted for a period of 6 months to a maximum of 60 months.

•    The recurring deposit shall be accepted for a period of minimum 12 months to a maximum of 60 months.

•    Unencumbered term deposits must be 10% higher of outstanding deposits.

•    The interest rates on deposit shall never exceed 2% above the rate offered by the nationalized bank.


The parts of Nidhi Company must be opened when it has earned a net profit after tax ceaselessly during three preceding years.

•    After the time of three years is elapsed by the Nidhi company can open up to 3 branches in the locale.

•    Nidhi Company can possibly open its branches when it has appropriately presented a budget summary and the yearly come back with the Registrar.

Rules relating to the director:

•    The director shall not hold the office for a term up to ten consecutive years.

•    The director shall be eligible for re-appointment only after the expiry of two years from the date of the expiry of ten years period.


For lending the loans followings limits are prescribed against the deposit made-

•    Loan amount 2 lakh – If the deposit is 2 Crore

•    Loan amount 75 lakh – If the deposit is more than 2 Crore but less than 20 crore

•    Loan amount 12 lakh – If the deposit is more than 20 Crore but less than 50 crore

•    Loan amount 15 lakh – If the deposit is more than 50 Crore.

Statutory Compliance for Nidhi Company:

The company which has been incorporated as a Nidhi Company with the sole purpose of accepting and lending money to its members is required to file a return of its statutory compliance in Form NDH-1 with Registrar within 90 days from the end of the financial year of its incorporation. NDH-3 Form shall have to fill after 30 days from the end of the half financial year. Auditors certificate that the company has requisitely complied with all the provision of the Act.

Final say:

I hope, now you understand all the aspects of the Nidhi Company. If you are ready to incorporate Nidhi company, and looking for the advisory help, you have come to the right place. We, at Unilex Business Consultant, will help you regarding all the process related to the Nidhi Company Registration. 

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