The Section 406 of the Companies Act, 2013, acknowledges a Nidhi Company as a specific organization that comes under the Indian Non-Banking Finance Division. The focal point of business operated by a Nidhi company is borrowing and loaning money among its members.
This results in members and shareholders conserving monetary and financial resources and investing them inside the company. These deposits are employed by the company for the benefit of its members or shareholders. It could either issue loans and advances to its members or obtain government-issued stocks, debentures, certificates and securities.
The Ministry of Corporate Affairs manages the operations of a Nidhi company, while its financial dealings are fundamentally monitored and controlled by the RBI. a Nidhi Company is an organization that is incorporated with the criterion of enhancing the habit of thrift and reserve funds amongst its members. It is an organization that also accepts deposits and offers loans to its inherent members for their common and mutual benefits.
A Nidhi Company belongs to the Indian Non-banking Finance sector. It is monitored, administered and recognized under Section 406 of the Indian Companies Act of 2013. A Nidhi Company thrives on its core business operations of borrowing and lending money amongst its members and shareholders.
The members are encouraged to save their financial resources and invest them under the auspices of the company. These deposits are utilized by the company to provide loans and advances and to acquire government-issued stocks, debentures, bonds and securities to its members.
The operations of a Nidhi Company is regulated by the Ministry of Corporate Affairs while its financial dealings are monitored strictly by the RBI. It is a company that is established with the sole objective of enhancing the habit of thrift and reserve funds amongst its members, while receiving their financial deposits and even lending them for mutual advantages.
What Are the Underlying Requirements of Nidhi Company?
A nidhi company must adhere to the following conditions in order to be legally functional and formed.
Minimum 200 members/shareholders
Minimum net fund of 10 lakhs owned by the company
Unencumbered term deposit must be at least 10% of the term deposit.
The ratio of Net Owned Fund to term deposit should not be less than 1:20
Advantages for forming a Nidhi Company
A nidhi company by the virtue of its formation is like a NBFC, there are many advantages associated with them. We are listing them here for the convenience of our readers:
1. Encourages & Promotes Savings
It's a community banking type of company where members are encouraged to save. They can easily lend and borrow money as per their requirements.
2. Fewer Complications
Unlike banks there are way fewer rules and regulations to be met while borrowing money from a nidhi company. It's best for people who do not meet the banking requirements for acquiring a loan.
3. No RBI Intervention
Nidhi companies are not regulated by the RBI, hence their compliance rules don't apply to them. Hence it's easier to operate.
4. Cheaper Funds
Nidhi companies provide loans at much more competitive rates than banks. They are not governed by RBI hence have independence in determining the rate of interest they would levy on the funds they disburse as loans.
Nidhi Company Registration Fees
Here are our packages for registering a Nidhi company. They are affordable and highly efficient. Your nidhi company will be formed without much hassles.
Save upto 10% cost on this package
(inclusive of all taxes)
Name Search Report
Name approval in RUN (Reserve Your Unique Name)
DSC(2no) (Extra Dsc Per Director – Rs-1000)
Filing Spice Form
Issue of Incorporation certificate along with PAN & TAN
Include Government Fees & Stamp Duty for Authorized Capital Upto -1 Lakh except for the state of
Here is the list of documents that are required while forming a Nidhi company.
Minimum of three directors
Minimum of seven shareholders
A minimum equity share capital of Rs 5 lakhs
Self Attested Copy of Pan Card
Self Attested copy of Aadhaar Card/Passport/Driving License/Voter Identity Card
Passport size photograph
Self Attested Copy of Bank Statement/Telephone Bill/Mobile Bill
Documents Needed For Registering Office
No-Objection letter from the Owner of Address to use the address of the registered office of the Company.
Electricity Bill/Telephone Bill/Gas Bill/Water Bill - To be signed by the of the Owner of Premises
Frequently Asked Questions (FAQs)
My Legal Clinic believes in answering your questions. We know that as a new business owner you would have certain levels of anxiety and doubts about how the legal business environment works, well don’t worry, read our FAQs, they have been put here to answer all the usual questions that you might have about forming a Nidhi Company.
How much capital is needed for company registration?
A minimum of 10 lakh INR is required as capital to form a nidhi company.
How many directors does a Nidhi company require?
3 directors are required at a minimum while forming a nidhi company.
How many shareholders does a Nidhi company require?
A nidhi company requires a minimum of 7 shareholders while its formation.
How long will it take to incorporate a Nidhi company?
Timelines may vary from case to case, if all your documents are in a proper shape then it can take anything between 15 days to 25 days for its incorporation.
Here is what our patrons have to say about us and our services.
It is our privilege to be a client of My Legal Clinic. Their financial, accounting and legal advisory services and support have been par excellence. On many occasions, they have gone beyond the call of duty to support Topline group in India.
Founder & Chairman, China Topline Consulting Corp.
I have many digital ventures. All of them require legal documentation. My Legal Clinic is one portal where I can shop for what I need at a click of a button - exactly the way I like things to be. Highly recommended portal for serious business guys.
Managing Director, Nimble Informatics Pvt. Ltd.
Creating my own e-commerce venture was easy. The difficult part was getting all legal compliance met. I needed a service provider that could get everything done from a single window. My Legal Clinic is that service provider. Thanks to them, everything is set now.
Partner, Pehrawa Collection
My Legal Clinic makes business legal compliance a piece of cake. From your basic licenses to complex requirements, these guys can get it done and on time - something a busy person like me highly appreciates. I now have more time to focus on business.
Partner, Rental Packs
As a new business person, getting documentation done was really draining my energy. Thankfully, I discovered My Legal Clinic and got everything sorted out from one place. I highly recommend their services to every entrepreneur.
Freelance Marketing Consultant
I am a corporate communications consultant. Meeting the business compliance requirements and documentation is not my cup of tea. That's why I trust My Legal Clinic for every licensing and business accounting needs.
Corporate Communications Consultant
Ready to Get Started?
Need some help with legal and other business compliance modalities for your business? Just write to us, someone from our team will connect with you soon.