Nidhi companies provide an excellent opportunity to start a community-based financial institution that is member-centric. The Nidhi Company Registration in India facilitates this process. This blog details everything about Nidhi Company Registration India process from eligibility to the final registration.

What is Nidhi Company?

A Nidhi Company is a unique type of Non-Banking Financial Company (NBFC) in India. It seeks to develop the culture of saving among its members. Nidhi Companies are permitted to borrow from their members and lend to their members exclusively as stated in Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014. Hence, it is also referred to as Mutual Benefit Companies. With a simplified process for Nidhi Company Registration India, it has become a viable option for providing community-based financial services.

Unlike other Non-Banking Financial Companies (NBFCs), Nidhi Company do not require a license from the Reserve Bank of India (RBI) to commence its operations, but the RBI monitors its financial transactions. It is registered as a public limited company and governed under the Ministry of Corporate Affairs (MCA). This specific nature of an NBFC Nidhi Company makes the Nidhi Company Registration India process quite simple.

Eligibility & Capital Requirement

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To ensure financial stability and protect the interests of the members, the MCA has established guidelines with regard to Nidhi Company Registration India.

Eligibility Criteria

Type of Company: It must be incorporated as a Public Limited Company.
Members: A minimum of seven members (shareholders) are required to start the company.
Directors: There must be a minimum of three directors.
Company Name: The name of the public limited company must end with the words "Nidhi Limited".
Objective: The Memorandum of Association (MoA) should clearly state that the aim of the company is to promote savings and make loans to its members for their mutual benefit.

Capital & Post-Incorporation Requirements

Initial Capital: In accordance with the Nidhi (Amendment) Rules, 2022, a Nidhi Company must be incorporated with a minimum paid-up equity share capital of ₹10 lakhs. Also, an NBFC Nidhi Company cannot issue preference shares.
Post-Incorporation Growth: Within one year of its incorporation, the NBFC Nidhi Company must meet the following:
- Increase its membership to at least 200 members.
- Have Net Owned Funds (NOF) of ₹20 lakhs or more.
- Maintain a Net Owned Funds to deposit ratio not exceeding 1:20.
- Ensure that unencumbered term deposits are at least 10% of the outstanding deposits. Meeting these requirements is a crucial part of the Nidhi Company Registration India process.

Documents Required

To facilitate the Nidhi Company registration India, comprehensive set of documents is required. Please prepare the following:

Director & Member Documents:
- Copy of PAN Cards of all directors and members.
- Proof of Identity (Aadhaar Card, Voter ID, Passport, or Driving License).
- Proof of Address (Latest Bank Statement, Utility Bill).
- Passport-sized photographs of all listed individuals.
Registered Office Documents:
Company Documents:

The Nidhi Company Registration Process

The Nidhi Company Process is executed online through the MCA portal. It consists of multiple steps that require attention for successful Nidhi Company Registration India.

Obtain DSC and DIN: Acquiring a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for every proposed director is the first step in the Nidhi Company Process.
Name Approval: The next step is to fill the SPICe+ Part A web form to apply for the name reservation of your company. The proposed name of the company must be unique and must end with "Nidhi Limited".
Draft MoA & AoA: Prepare the Memorandum of Association and Articles of Association. The object clause in the MoA is a critical part and must comply with the rules and regulations for an NBFC Nidhi Company.
File Incorporation Forms: The SPICe+ Part B form is used to file the main application for incorporation. This form is a composite application for PAN, TAN, and GSTIN. You need to file this form alongside the MoA, AoA, and other applicable documents.
Receive Certificate of Incorporation: The Registrar of Companies (ROC) will verify all your documents. Upon satisfaction, the ROC will issue a Certificate of Incorporation containing the Corporate Identification Number (CIN). Your Nidhi Company Registration India is now complete.
Open Bank Account: After receiving the CIN and PAN, you can open a corporate bank account in the name of the company to complete the Nidhi company process.

How Lawfinity Helps

Understanding the Nidhi Company Process can be little complex. At Lawfinity, our team of legal experts simplify the entire process of Nidhi Company Registration India with their expertise. We provide end-to-end assistance from getting your DSC and DIN to drafting your legal documents and filing all the necessary forms with the MCA. Our experts make sure your registration is fast, up to date with the latest amendments and completely hassle-free so you can focus on growing your member community.