Nidhi Company Registration in India

What is a Nidhi Company in India?

The term Nidhi means Treasure. Therefore, we can understand the concept of Nidhi Company in India by understanding its meaning. It is a company in Financial Sector that accepts any amount or funds deposited by its member and then lends the deposited amount to the other members of the company for benefits that are mutual. The main source of income in a Nidhi Company in is the interest on the loans provided by it. A Nidhi Company in India cannot undertake certain business operations like-

  • Finance Leasing
  • Chit funds
  • Hiring Purchase Finance

Salient features of Nidhi Company in India:

A Nidhi Company has its features that makes it a good option for incorporating. Its salient features are-

  • It can be opened as a public company.
  • The required minimum share capital for registration of Nidhi Company in India is only Rs. 5,00,000.
  • They work just like a Non- Banking Financial Company (NBFC).
  • This type of company is not needed to comply with the rules of Reserve Bank of India (RBI).
  • Within one year of its incorporation it must have at least 200 members as part of it.
  • At end of its first year at least an investment of Rs. 10,00,000 must be made in it.
  • Lending power of Nidhi Company make it liable to advance loans to its members.
  • All the directors in the Nidhi Company in India must also be its members.
  • It keeps at least 10% of its fund as fixed deposit in a scheduled bank.
  • It cannot issue any of its preference shares.

Benefits of Registration of Nidhi Company in India:

Having Registration for the Nidhi Company in India makes the company more viable to multiple number of benefits-

  • It gives relaxation from the Reserve Bank of India rules and regulations to the company.
  • It does not provide loans to any non-member or an outsider. Only members of the company are allowed to raise loans and funds. This reduces the chances of bad debts of any kind for the company.
  • The required capital funds are as low as Rs. 5,00,000 for incorporation of Nidhi Company in India.
  • The rate of interest in a Nidhi Company are very low as compare to the market rate of interest.
  • It is easy to register a Nidhi Company and it does not even require a license from the Reserve Bank of India (RBI) for its operations.
  • It aims at managing the fund specially helping the lower section in the society.

Procedure for Nidhi Company Registration in India:

 The steps in the process of registering a Nidhi Company are-

  • A declaration in Form DIR-2 is to filed by the directors of the company.
  • Applying for Director Identification Number (DIN) and Digital Signature Certificate (DSC).
  • Through filing Form INC-1, reserving a name for the Nidhi Company.
  • Preparing the Memorandum of Association (MoA).
  • Preparing the draft of Articles of Association (AoA).
  • Application for registration through Form INC-7 to the Registrar of Companies (ROC).
  • Filing INC-22.
  • Filing DIR-12 for the appointment of directors in the Nidhi Company in India.

Documentation for Registration of Nidhi Company in India:

The documents required at the time of Nidhi Company Registration are-

  • PAN Card of every director in the company.
  • Passport size photographs of the directors of the Nidhi Company.
  • AADHAAR Card/ Driving License/ Passport for identification.
  • Bank Statements/ Water Bill/ Electricity Bill or utilities bill as address proof.
  • Address proof for the registered office of the Nidhi Company which can be Electricity or utilities bill/ rent agreement in case of rented office.
  • No-Objection Certificate from the owner if the place of office is rented.
Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.