A Nidhi Company is a specific type of Non-Banking Financial Company (NBFC) that is incorporated under the Companies Act 2013 specifically for cultivating the habit of thrift and savings among its members and lending to members only. Unlike banks and NBFCs, Nidhi companies deal only with their members — they cannot take deposits from the general public or lend to non-members.
What is a Nidhi Company?
- ▸Governed by Companies Act 2013 + Nidhi Rules 2014 (amended 2022)
- ▸Regulated by the Ministry of Corporate Affairs (MCA) — not RBI
- ▸Members pool savings, earn interest; company lends to members for personal/business needs
- ▸Common in Tamil Nadu, Karnataka, and Andhra Pradesh
- ▸Similar to cooperative credit societies but structured as a company
Key Features
- ▸Accepts deposits only from members
- ▸Lends only to members (against fixed deposits, gold, or property)
- ▸Cannot open current accounts
- ▸Cannot undertake chit fund, hire purchase, or insurance business
- ▸Profit used only for declared dividends or improving the fund
- ▸Directors must be members
Minimum Requirements to Incorporate
| Requirement | Amount/Count |
|---|---|
| Minimum members | 200 (within 1 year of incorporation) |
| Minimum paid-up share capital | ₹10 lakh |
| Net Owned Funds (NOF) | ₹20 lakh |
| NOF to Deposits ratio | Max 1:20 |
| Unencumbered term deposits | Min 10% of outstanding deposits |
Registration Process
Step 1: Incorporate as a Public Limited Company
Step 2: Build membership to 200+ within first year
Step 3: Apply for Nidhi Declaration
Step 4: If application approved → officially declared as Nidhi
Step 5: Ongoing: File NDH-1, NDH-2 (extension requests), NDH-3 (half-yearly returns) annually
- ▸Name must end with "Nidhi Limited"
- ▸File SPICe+ form with MCA with Nidhi-specific MoA/AoA
- ▸Minimum 7 members + 3 directors at time of incorporation
- ▸File Form NDH-1 (within 90 days of financial year end)
- ▸Submit to ROC with list of 200+ members, NOF proof, deposit/loan data
Annual Compliance for Nidhi Companies
- ▸NDH-1: Annual report — filed annually with ROC
- ▸NDH-3: Half-yearly return (April–September, October–March)
- ▸MGT-7: Annual return (same as other companies)
- ▸AOC-4: Financial statements
- ▸ITR-6: Income tax return
- ▸Statutory audit mandatory regardless of turnover
Conclusion
Nidhi Companies are ideal for rural and semi-urban communities for creating local credit systems. However, they require careful compliance with NOF ratios, deposit limits, and MCA reporting. Biswa Corporate Solutions provides Nidhi Company incorporation, MoA/AoA drafting, and ongoing compliance management.
