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Overview

Nidhi Company Registration in India

A Nidhi Company is a unique type of Non-Banking Financial Company (NBFC) in India that promotes savings and mutual benefit among its members. Governed by Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014, the primary goal of a Nidhi Company is to encourage its members to save money and provide financial services exclusively to its members, such as loans and deposits. Nidhi Companies operate on mutual benefit principles and do not require a license from the Reserve Bank of India (RBI), making them easier and more cost-effective to set up compared to other NBFCs. However, they are restricted from engaging in external lending or borrowing activities.

Why Registration is Important

  1. Legal Recognition : Establishes the Nidhi Company as a separate legal entity.
  2. Member Savings : Encourages thrift and savings habits among members in a legally regulated manner.
  3. Limited Liability : Protects personal assets of members by limiting liability to the amount contributed.
  4. Easy Loan Access : Facilitates secure and accessible loans for members with favorable interest rates.
  5. Government Oversight : Ensures the company's operations are legally compliant under MCA (Ministry of Corporate Affairs) regulations.

Documents Required

To register a Nidhi Company in India, the following documents are generally required

For Directors and Shareholders

For Registered Office

Additional Documents


Procedures

The procedure to register a Nidhi Company in India involves the following steps

  • DSC
    Obtain Digital Signature Certificate.
    The proposed directors must obtain a DSC, which will be used to sign electronic documents.
  • DIN
    Obtain Director Identification Number
    Apply for DIN for all proposed directors using the SPICe+ form.
  • Name Reservation
    Name Reservation
    File the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) Part A form to reserve a unique name for the Nidhi Company.
  • MOA and AOA
    Drafting of MOA and AOA
    The Memorandum of Association (MOA) should state that the company’s objective is to encourage savings and mutual benefit among its members. The Articles of Association (AOA) outlines the company’s rules and regulations.
  • Filing of Incorporation Forms
    Filing of Incorporation Forms
    Complete SPICe+ Part B for company incorporation, providing details of the company's directors, shareholders, and registered office.
  • Certificate of Incorporation
    Obtain Certificate of Incorporation
    Once all the documents are verified, the Registrar of Companies (ROC) issues the Certificate of Incorporation, officially recognizing the Nidhi Company.
  • Apply for PAN and TAN
    Apply for PAN and TAN
    The company automatically receives its PAN and TAN along with the Certificate of Incorporation.
  • Commencement of Business
    Commencement of Business
    The company must file Form INC-20A (Declaration of Commencement of Business) within 180 days of incorporation.
  • Post-Incorporation Requirements
    Fulfillment of Post-Incorporation Requirements
    The Nidhi Company must meet specific criteria, such as having at least 200 members within one year of incorporation and maintaining a Net Owned Fund (NOF) of ₹10 lakh or more.
  • Nidhi Rules
    Compliance with Nidhi Rules
    The Nidhi Company must adhere to Nidhi Rules, 2014, which include restrictions on lending, borrowing, and investment practices.


Features

Features & Benefits of Nidhi Company in India

No RBI License Required
Nidhi Companies are exempt from obtaining an RBI license to operate.
Prev Next
Limited to Members
All financial transactions (deposit-taking and lending) are limited to the company’s members.
Prev Next
Encourages Savings
Nidhi Companies are designed to promote savings and thrift among their members.
Prev Next
No External Involvement
A Nidhi Company cannot engage in any external borrowing or lending activities.
Prev Next
Limited Liability
The liability of members is limited to the amount of capital they contribute.
Prev Next

Nidhi Company Registration in India

Minimum Capital Requirement
A minimum paid-up equity share capital of ₹5 lakh is required to start a Nidhi Company.
Prev Next
Membership Requirement
The company must have at least 200 members within one year of incorporation.
Prev Next
Restrictions on Loans and Deposits
Loans can only be given to members, and deposits cannot exceed 20 times the Net Owned Funds (NOF).
Prev Next
Compliance with Nidhi Rules
The company must comply with Nidhi Rules, 2014, regarding the management of funds and operations.
Prev Next
No Interest on Deposits
Nidhi Companies are not allowed to pay interest on deposits from anyone other than their members, ensuring all benefits stay within the member community.
Prev Next


Comparison between Nidhi Company,NBFC And Cooperative Society

Features Nidhi Company NBFC Cooperative Society
Legal Status Separate Legal Entity Separate Legal Entity SSeparate Legal Entity
Regulatory Authority Ministry of Corporate Affairs (MCA) Reserve Bank of India (RBI) State Cooperative Department
License Requirement No RBI License Required Requires RBI License Requires Registration under State Laws
Primary Objective Mutual Benefit and Savings Financial Services and Lending Cooperative Benefits for Members
Membership Minimum 200 members No minimum membership Typically large member base
Area of Operation Restricted to members Can operate across India Limited to members or state-specific
Loan and Deposit Limits Regulated by Nidhi Rules Regulated by RBI Governed by Cooperative Societies Act
Fundraising Capability Limited to member contributions Wide range of fundraising options Contributions from members
Compliance Requirements Moderate High High


Frequently Asked Questions

What is the primary objective of a Nidhi Company?

The primary objective of a Nidhi Company is to encourage savings among its members and provide loans to them at reasonable interest rates for their mutual benefit.

Is it mandatory to register a Nidhi Company under the RBI?

No, Nidhi Companies are exempt from RBI registration. They are regulated by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013.

What are the post-incorporation requirements for a Nidhi Company?

A Nidhi Company must have at least 200 members within one year of incorporation and maintain a minimum Net Owned Fund (NOF) of ₹10 lakh. It must also comply with Nidhi Rules, 2014.

Can a Nidhi Company accept deposits from non-members?

No, Nidhi Companies can only accept deposits from their members.

What is the minimum capital requirement for a Nidhi Company?

The minimum paid-up equity share capital required to start a Nidhi Company is ₹5 lakh.

Are there any restrictions on loans given by a Nidhi Company?

Yes, loans can only be given to members, and the amount of loans and deposits is regulated by Nidhi Rules, 2014.

Overview

A Nidhi Company Registration in India

A Nidhi Company is a unique type of Non-Banking Financial Company (NBFC) in India that promotes savings and mutual benefit among its members. Governed by Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014, the primary goal of a Nidhi Company is to encourage its members to save money and provide financial services exclusively to its members, such as loans and deposits. Nidhi Companies operate on mutual benefit principles and do not require a license from the Reserve Bank of India (RBI), making them easier and more cost-effective to set up compared to other NBFCs. However, they are restricted from engaging in external lending or borrowing activities.

Why Registration is Important

  1. Legal Recognition: Establishes the Nidhi Company as a separate legal entity.
  2. Member Savings:Encourages thrift and savings habits among members in a legally regulated manner.
  3. Limited Liability:Protects personal assets of members by limiting liability to the amount contributed.
  4. Easy Loan Access:Facilitates secure and accessible loans for members with favorable interest rates.
  5. Government Oversight:Ensures the company's operations are legally compliant under MCA (Ministry of Corporate Affairs) regulations.

Documents Required

To register a Nidhi Company in India, the following documents are generally required

For Directors and Shareholders

For Registered Office

Additional Documents

Procedures

  • DSC
    Obtain Digital Signature Certificate
    The proposed directors must obtain a DSC, which will be used to sign electronic documents.
  • DIN
    Obtain Director Identification Number
    Apply for DIN for all proposed directors using the SPICe+ form.
  • Name Reservation
    Name Reservation
    File the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) Part A form to reserve a unique name for the Nidhi Company.
  • MOA and AOA
    Drafting of MOA and AOA
    The Memorandum of Association (MOA) should state that the company’s objective is to encourage savings and mutual benefit among its members. The Articles of Association (AOA) outlines the company’s rules and regulations.
  • Incorporation Forms
    Filing of Incorporation Forms
    Complete SPICe+ Part B for company incorporation, providing details of the company's directors, shareholders, and registered office.
  • Certificate of Incorporation
    Obtain Certificate of Incorporation
    Once all the documents are verified, the Registrar of Companies (ROC) issues the Certificate of Incorporation, officially recognizing the Nidhi Company.
  • PAN & TAN
    The company automatically receives its PAN and TAN along with the Certificate of Incorporation.
    Once all the documents are verified, the Registrar of Companies (ROC) issues the Certificate of Incorporation, officially recognizing the Nidhi Company.
  • Commencement of Business
    Commencement of Business
    The company must file Form INC-20A (Declaration of Commencement of Business) within 180 days of incorporation..
  • Post-Incorporation
    Fulfillment of Post-Incorporation Requirements
    The Nidhi Company must meet specific criteria, such as having at least 200 members within one year of incorporation and maintaining a Net Owned Fund (NOF) of ₹10 lakh or more.
  • Nidhi Rules
    Compliance with Nidhi Rules
    The Nidhi Company must adhere to Nidhi Rules, 2014, which include restrictions on lending, borrowing, and investment practices.

Features

Features & Benefits of Nidhi Registration

No RBI License Required

Nidhi Companies are exempt from obtaining an RBI license to operate.

Limited to Members

All financial transactions (deposit-taking and lending) are limited to the company’s members.

Encourages Savings

Nidhi Companies are designed to promote savings and thrift among their members.

No External Involvement

A Nidhi Company cannot engage in any external borrowing or lending activities.

Limited Liability

The liability of members is limited to the amount of capital they contribute.

Minimum Capital Requirement

A minimum paid-up equity share capital of ₹5 lakh is required to start a Nidhi Company.

Membership Requirement

The company must have at least 200 members within one year of incorporation.

Restrictions on Loans and Deposits

Loans can only be given to members, and deposits cannot exceed 20 times the Net Owned Funds (NOF).

Compliance with Nidhi Rules

The company must comply with Nidhi Rules, 2014, regarding the management of funds and operations.

No Interest on Deposits from Non-Members

Nidhi Companies are not allowed to pay interest on deposits from anyone other than their members, ensuring all benefits stay within the member community.

Comparison between Nidhi Company,NBFC And Cooperative Society

Features Nidhi Company NBFC Cooperative Society
Legal Status Separate Legal Entity Separate Legal Entity SSeparate Legal Entity
Regulatory Authority Ministry of Corporate Affairs (MCA) Reserve Bank of India (RBI) State Cooperative Department
License Requirement No RBI License Required Requires RBI License Requires Registration under State Laws
Primary Objective Mutual Benefit and Savings Financial Services and Lending Cooperative Benefits for Members
Membership Minimum 200 members No minimum membership Typically large member base
Area of Operation Restricted to members Can operate across India Limited to members or state-specific
Loan and Deposit Limits Regulated by Nidhi Rules Regulated by RBI Governed by Cooperative Societies Act
Fundraising Capability Limited to member contributions Wide range of fundraising options Contributions from members
Compliance Requirements Moderate High High

Frequently Asked Questions

What is the primary objective of a Nidhi Company?

The primary objective of a Nidhi Company is to encourage savings among its members and provide loans to them at reasonable interest rates for their mutual benefit.

Is it mandatory to register a Nidhi Company under the RBI?

No, Nidhi Companies are exempt from RBI registration. They are regulated by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013.

What are the post-incorporation requirements for a Nidhi Company?

A Nidhi Company must have at least 200 members within one year of incorporation and maintain a minimum Net Owned Fund (NOF) of ₹10 lakh. It must also comply with Nidhi Rules, 2014.

Can a Nidhi Company accept deposits from non-members?

No, Nidhi Companies can only accept deposits from their members.

What is the minimum capital requirement for a Nidhi Company?

The minimum paid-up equity share capital required to start a Nidhi Company is ₹5 lakh.

Are there any restrictions on loans given by a Nidhi Company?

Yes, loans can only be given to members, and the amount of loans and deposits is regulated by Nidhi Rules, 2014.

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