Overview
A Nidhi company is a public company that is incorporated to cultivate thrift and savings among its members. It accepts deposits from members and lends only to members for their mutual benefit. It is governed by Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014. Since the 2022 amendment, it must obtain a declaration from the Central Government in Form NDH-4 before it can operate as a Nidhi.
What Is a Nidhi Company?
Nidhi companies are “mutual benefit societies” in company form. They are exempt from RBI’s NBFC registration but face strict operating limits. They cannot deal with the public, cannot issue preference shares or debentures, cannot run chit funds or insurance, and cannot lend to non-members.
Who Needs This Service?
Community groups and cooperatively minded promoters who want to run a regulated member-only savings and lending institution. It does not suit general lending to the public, which needs NBFC registration with the RBI.
Nidhi Company Registration in Chennai / Tamil Nadu
Tamil Nadu has historically been home to a large share of India’s Nidhi companies. NDH-4 applications from Tamil Nadu companies are examined by the Regional Director (Southern Region), Chennai, and incorporation falls under ROC Chennai or ROC Coimbatore.
Nidhi Company Compared with an NBFC and a Co-operative Society
These bodies all handle savings and loans but under different regulators and with different customers.
| Feature | Nidhi company | NBFC | Co-operative society |
|---|---|---|---|
| Who it deals with | Members only | The public | Members only |
| Regulator | Ministry of Corporate Affairs under the Nidhi Rules | Reserve Bank of India | Registrar of Co-operative Societies |
| Source of funds | Member deposits and equity | Public deposits (where permitted), borrowings, equity | Member shares and deposits |
| Lending | Loans to members against adequate security | Loans to customers as permitted | Loans to members |
Eligibility and Requirements
- Incorporation as a public company with “Nidhi Limited” in its name, and with at least 7 members and 3 directors.
- Minimum paid-up equity share capital of ₹10 lakh at incorporation.
- Within 120 days of incorporation: at least 200 members and Net Owned Funds (NOF) of ₹20 lakh, followed by an application for declaration in Form NDH-4.
- NOF-to-deposit ratio not more than 1:20, and unencumbered term deposits of at least 10% of outstanding deposits.
- Promoters and directors must meet the fit-and-proper criteria in the 2022 amendment.
Key Nidhi Conditions to Plan Around
The Nidhi Rules attach conditions that continue after incorporation. Confirm current values before filing.
| Condition | Position under the Nidhi Rules |
|---|---|
| Members at incorporation | At least seven |
| Directors | At least three |
| Membership target | 200 members within one year of incorporation |
| Net owned funds | ₹10 lakh within one year |
| Unencumbered term deposits | At least 10% of outstanding deposits |
| Deposit ratio | Net owned funds to deposits within the prescribed ratio |
Documents Required
Provide KYC and PAN for subscribers and directors; registered office proof; an MoA with objects restricted to Nidhi business; director declarations; and, at the NDH-4 stage, the member list, NOF details and an auditor’s certificate.
Application Process
- Incorporate the public company through SPICe+ with Nidhi-compliant objects and name.
- Raise membership to 200 and reach NOF of ₹20 lakh within 120 days.
- File NDH-4 with the Regional Director for the declaration within the prescribed period.
- After the declaration, operate within the Rules and file NDH-1 (return of statutory compliances) and NDH-3 (half-yearly return).
How KVA Handles Nidhi Company Registration
Karthick Vijayakumar & Associates, Company Secretaries, supports you through each stage with a single point of contact and a clear record of what has been done.
| Step | Stage | What KVA does |
|---|---|---|
| 1 | Requirement review | We understand your entity, objective and timeline, and confirm what Nidhi Company Registration involves for your specific facts. |
| 2 | Document checklist | You receive a clear list of documents, particulars and approvals needed, with gaps flagged early. |
| 3 | Preparation and filing | Our team prepares, reviews and files the required forms and records, and tracks each acknowledgement. |
| 4 | Completion and follow-up | We hand over final records and explain the compliance that follows, so nothing is missed afterwards. |
Fees and Charges
MCA fees are payable according to the capital and NDH-4 fee tables, and state stamp duty applies. Professional fees are available on enquiry.
Processing Time
Incorporation takes around 2–3 weeks. The NDH-4 declaration is subject to the Regional Director’s review, and its timeline cannot be assured.
Why Karthick Vijayakumar & Associates
Work is handled by company secretaries who deal with statutory filings and governance every day.
Timelines for Nidhi Company Registration are tracked so that approvals and filings do not slip.
Plain-language updates at each stage, with no guesswork about what is pending.
Organised, decision-ready documentation that supports audits, banks and future filings.
Frequently Asked Questions
₹10 lakh paid-up equity share capital at incorporation, with NOF of ₹20 lakh within 120 days.
Seven to incorporate, and at least 200 within 120 days.
No. Nidhis are exempt from NBFC registration but are regulated by the MCA under the Nidhi Rules.
It is the application for declaration as a Nidhi company, filed with the Central Government (through the Regional Director) after the membership and NOF requirements are met.
No. Deposits can be accepted only from members.
Only after earning net profits in each of the three preceding years, and only within the district, subject to the limits and intimations in the Rules.
Not more than the maximum rate that NBFCs are permitted to pay under RBI directions.
Loans to members only, against security such as gold, property, or fixed deposits, within the prescribed limits.
NDH-1 is filed annually with the annual financial statements, and NDH-3 is filed half-yearly. These are in addition to the regular AOC-4 and MGT-7.
The company cannot function as a Nidhi and may face penal action. It must then either comply or change its objects and name.
No. It can issue only equity shares.
Doing so requires meeting RBI’s NBFC registration requirements and changing the company’s constitution. It is a significant regulatory process.
A Nidhi company promotes thrift among its members by receiving deposits from and lending to its members only, for their mutual benefit.
Yes. The Nidhi Rules require the company to meet prescribed net owned funds and to maintain a stated ratio of net owned funds to deposits and a minimum unencumbered term deposit.
No. A Nidhi may not carry out chit funds, hire purchase, leasing or insurance business, and cannot solicit deposits from the public.
Yes, a Nidhi may lend to members against security such as gold, silver, jewellery, immovable property or fixed deposits, within the limits set by the Rules.
After incorporation, the company must complete the membership and fund conditions and file NDH-4 within the prescribed period. Timelines depend on how quickly these conditions are met.
A Nidhi company is subject to the usual Companies Act requirements, and its periodic returns and compliance are best handled by a qualified professional.
Yes, a Nidhi may declare dividends to its members from profits, subject to the Companies Act conditions and the requirements of the Nidhi Rules.
The company’s name must end with the words “Nidhi Limited”, which clearly identifies it as a Nidhi company.
Exploring Nidhi Company Registration?
Contact Karthick Vijayakumar & Associates to review the capital, membership and declaration requirements before you incorporate.
Contact UsSpeak with Karthick Vijayakumar & Associates
Third Floor, New No. 599, Old No. 230, Konnur High Road, Ayanavaram, Chennai, Tamil Nadu, 600023, India
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