A Nidhi Company is a unique type of non-banking financial company (NBFC) that primarily focuses on lending and borrowing activities among its members. In India, Nidhi Companies are governed by the Ministry of Corporate Affairs (MCA) and are regulated under the Companies Act, 2013, specifically the provisions related to Section 406.
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The primary objective of a Nidhi Company is to cultivate the habit of savings and mutual lending within a community. These companies work on a simple model of providing financial services to their members, such as loans and deposits, while promoting a culture of financial inclusion.
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A Nidhi Company is a special type of company formed under the Indian Companies Act with the objective of promoting the habit of thrift and savings among its members. It essentially operates as a mutual benefit society that accepts deposits from its members and lends money only to its members, creating a unique model of financial intermediation.
Nidhi Companies are typically restricted to working with their own members (individuals who are part of the company) and cannot lend or accept deposits from the general public. They play a significant role in fostering financial inclusion and enabling easier access to loans and financial services for individuals, especially those in small communities or rural areas.
Membership-Based A Nidhi Company can only lend and borrow money from its members. This means it primarily operates within a closed group of individuals.
Lending and Borrowing- Nidhi Companies accept deposits from members and provide loans to them, typically at low interest rates compared to traditional banks.
Mutual Benefit- The primary objective of a Nidhi Company is mutual benefit, focusing on helping members save money and access financial services like loans for personal, business, or educational needs.
Minimum Capital According to the Companies Act, a Nidhi Company must have a minimum paid-up capital of Rs. 5 lakhs. However, the company's capital can increase over time as the membership base grows.
Regulation- Nidhi Companies are regulated by the MCA, but they are exempted from certain NBFC regulations. The company must also comply with the Reserve Bank of India (RBI) guidelines, although they are not directly supervised by the RBI like other financial institutions.
Limited Operations- A Nidhi Company is limited in its operations. It cannot engage in business activities outside of lending, borrowing, and financial intermediation between its members. It is also not allowed to deal with foreign currency or make investments in real estate or capital markets.
Consult an expert at ECS India for hassle-free company registration services, ensuring compliance and smooth establishment of your business.
Starting a Nidhi Company involves several legal procedures that need to be carried out systematically to ensure compliance with the Companies Act, 2013 and other relevant regulations. ECS India simplifies the entire registration process by providing professional assistance. Here’s an overview of the key steps:
The first step in registering a Nidhi Company is to obtain a Digital Signature Certificate (DSC) for the proposed directors. The DSC is essential for filing online documents with the Ministry of Corporate Affairs (MCA).
Each director of the Nidhi Company must have a Director Identification Number (DIN), which is mandatory for company registration. ECS India helps in filing the necessary forms to obtain the DIN.
You need to choose a unique name for your Nidhi Company. ECS India assists in filing an application with the MCA for name approval, ensuring that the name adheres to the MCA guidelines.
The Memorandum of Association (MoA) and Articles of Association (AoA) are key documents that define the purpose, rules, and regulations governing the company. ECS India drafts these documents to ensure that your Nidhi Company is in compliance with legal norms.
Once all the documents are prepared, ECS India files them with the MCA for approval. This includes submitting the application for incorporation, along with the MoA, AoA, and other required documents.
Upon successful verification of the submitted documents, the MCA grants the Certificate of Incorporation for your Nidhi Company. At this point, your company is officially registered and can begin its operations.
Once your Nidhi Company is registered, ongoing compliance is crucial to ensure that it operates within the legal framework. Some key compliance requirements include:
Annual General Meeting (AGM): – A Nidhi Company must hold an AGM every year to discuss financial matters, elect directors, and other operational aspects.
Financial Statements: – Nidhi Companies must maintain accurate financial records and file annual returns with the MCA.
Net Owned Funds: – Nidhi Companies must maintain a minimum net owned fund (NOF) ratio as per the regulations set by the Ministry of Corporate Affairs.
Deposits: – Nidhi Companies can accept deposits only from their members, and the total deposits must adhere to prescribed limits and conditions.
Loan Guidelines: – Nidhi Companies are expected to follow specific guidelines regarding the interest rates on loans to members, ensuring fairness and transparency.
Proper documentation is essential for BIS CRS registration, ensuring smooth processing and compliance with standards. Key documents include technical details, test reports, company information, and authorization letters, which collectively verify product conformity and streamline the certification process efficiently. Below is a list of commonly required documents.
Business-related Documents
Product-related Documents
Testing-related Documents
ECS India is a trusted name in the field of company registration and compliance. We offer a seamless process for Nidhi Company registration, providing you with comprehensive legal and regulatory support. Our team of experts ensures that all documentation, filings, and procedures are carried out efficiently, helping you save time and avoid potential pitfalls.
Our services include:
ECS India is committed to helping you build a strong foundation for your Nidhi Company, empowering you to foster financial growth and mutual benefit within your community. Let us guide you through the registration process and ensure that your Nidhi Company is set up for success.
If you’re interested in starting a Nidhi Company, ECS India offers expert guidance and end-to-end solutions for Nidhi Company registration, compliance, and management. With years of experience in company formation and regulatory affairs, ECS India ensures that your Nidhi Company is set up in compliance with all legal requirements and operational guidelines.
Have questions or need assistance? Submit your enquiry, and our team will promptly assist with your requirements. Contact us now!
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Our expert team of professionals is ready to guide you through the entire process, ensuring a hassle-free and smooth registration. Our goal is to make it as easy and stress-free as possible.
A Nidhi Company is a type of Non-Banking Financial Company (NBFC) focused on lending and borrowing activities exclusively among its members. Its primary objective is to promote savings, thrift, and mutual financial benefit within a specific community.
Only individuals who join the company as members can participate in its activities. Nidhi Companies do not accept deposits or provide loans to the general public.
To register a Nidhi Company, you need a minimum paid-up capital of ₹5 lakhs, at least three directors, seven members, and adherence to the Companies Act, 2013. Additional documentation such as MoA and AoA is also required.
Key documents include the Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) for directors, a unique company name, the Memorandum of Association (MoA), and Articles of Association (AoA).
Nidhi Companies must conduct annual general meetings, maintain accurate financial statements, adhere to net-owned fund (NOF) requirements, and follow strict deposit and lending guidelines as per MCA regulations. minimizing environmental impact. The energy star rating system provides transparency, enabling buyers to choose appliances that offer long-term savings and support sustainable energy usage.
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