How to Register Nidhi Company?


Nidhi in colloquial language means “Treasure”.

Nidhi means a company which has been incorporated with the object of cultivating the habit of savings amongst its members, receiving deposits from, and lending to, its members. Nidhi Companies are registered for mutual benefits of their members.

Since main businesses of Nidhi companies are borrowing from or lending to Members, therefore Nidhi companies come under the definition of NBFC company, so it comes under the radar of RBI.

Nidhi Company Registration

To start a Nidhi Company in India the first step is to incorporate a Limited Company, under the Companies Act, 2013. Hence, a minimum of three Directors and seven shareholders will be required to start the Limited Company incorporation process. During incorporation of the Nidhi Company, care must be taken to ensure that the object of the Limited Company mentioned in the Memorandum of Association is that of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.

Post incorporation of the Limited Company, within a period of one year from the commencement, the Nidhi Company must meet all of the following criteria:

  • Not have less than two hundred members (shareholders);
  • Have Net Owned Funds (NOF) of ten lakh rupees or more;
  • Have unencumbered term deposits of not less than ten percent of the outstanding deposits; and
  • Have a ratio of Net Owned Funds to deposits of not more than 1:20.

“Net Owned Funds” means the aggregate of paid up equity share capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet

If the Nidhi Company satisfies the above conditions required for operating as a Nidhi Company, the company shall within ninety days from the close of the first financial year after its incorporation and where applicable, the second financial year, file a return of statutory compliances in Form NDH-1 duly certified by a practicing CA/CS/CWA along with the requisite fees.

In a case at the end one year from commencement the Nidhi Company is not able to meet the above requirement, the Company may within thirty days from the close of the first financial yea, apply to the Regional Director in Form NDH-2 for extension of time.

If even after the second financial year the Nidhi Company is not able to meet the requirements for a Nidhi Company, then the Nidhi Company shall not accept any further deposits from the commencement of the second financial year till it complies with the provisions for operating as a Nidhi Company and be liable for penal consequences.

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