Nidhi Company is one of the categories of NBFC or in other words, it is the cheapest and easiest form of NBFC as well. Also, it is very easy form to register and does not require much capital. Anybody can register a Nidhi Company with only 5 Lac rupees minimum capital and with minimum of seven members.

The word “Nidhi” in Nidhi Company comes from a root word traditionally meaning “treasure” They are created primarily for the motive of cultivating the habit of thrift, savings and functioning for the mutual benefit of members by receiving deposits only from individuals enrolled as members and by lending only to individuals, also enrolled as members. The loans are given to the members at relatively reasonable rates for purposes such as house construction or repairs and are generally secured. The deposits mobilized by Nidhis are not much when compared to the organized banking sector.

Provisions Under Section 406 of Companies Act, 2013 and rules thereof

In this section, “Nidhi” means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.

Regulating Rules Nidhi Rules, 2014

A Nidhi company cannot

  • Be incorporated as Private Limited Company.
  • Have a paid up equity share capital less than five Lac rupees.
  • Issue preference shares.
  • Have any shareholder other than an individual.
  • Have less than 200 Members (A minor cannot become member).
  • Have Net Owned Funds (aggregate of paid up equity share capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet) less than ten Lac rupees.
  • Open branches until and unless it has earned net profits after tax continuously during the preceding three financial years.
  • Have Ratio of net owned funds to deposit more than 1:20
  • Accept fixed deposits and Recurring deposits for more than sixty months and minimum six months and twelve months respectively.
  • Do business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by anybody corporate.
  • Carry on any business other than the business of borrowing or lending in its own name.
  • Open any current account with its members.
  • Offer interest on fixed and recurring deposits at a rate exceeding the maximum rate of interest prescribed by the Reserve Bank of India which the Non-Banking Financial Companies can pay on their public deposits.
  • give loans to its members other than on the following securities:
  • gold, silver and jewellery (Repayment period shall not exceed 1 year)
  • immovable property
  • fixed deposit receipts, National Savings Certificates, other Government Securities and insurance policies
  • If Nidhi Company fails to repay the deposit or part thereof as per the terms and conditions of such deposit, the depositor may approach the Registrar of companies having jurisdiction over Nidhi Company.

A Nidhi Company shall provide loans only to its members up to the below amount:

S. No. Deposit Slab Permissible Loan Amount
1 Where total deposit amount is less than Two Crore Rupees Two Lac
2 Where total deposit amount is or more than Two Crore but less than Twenty  Crore Rupees Seven Lac and Fifty thousand
3 Where total deposit amount is or more than Twenty Crore but less than Fifty  Crore Rupees Twelve Lac
4 Where total deposit amount is or more than Fifty Crore Rupees Fifteen Lac
  • A member shall not be eligible for any further loan if he has borrowed any earlier loan from the company and has defaulted in repayment of such loan.

Filing Requirement under the Companies Act, 2013

Purpose Form Number Time Limit
Incorporation SPICE Form Not Applicable
Not Applicable
Not Applicable
Return of Statutory Compliances NDH-1 Within ninety days from the close of the first financial year after its incorporation and where applicable, the second financial year
Application made to Regional director for extension of time for complying statutory compliance NDH-2 within thirty days from the close of the first financial year
Half yearly return with the Registrar NDH-3 within thirty days from the conclusion of each half year


Nidhi Companies have been EXEMPTED from the requirement of registration under Section 45-IA of the RBI Act, 1934

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Author Bio

Qualification: CS
Company: Arvind Meena & Associates
Location: Indore, Madhya Pradesh, IN
Member Since: 30 May 2019 | Total Posts: 3

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  1. Hemant B Karlekar says:

    Wow grt …Arvind i really appreciate your progressive thinking and the content in the article…you are dianamic, hardwrka and enthusistc persnlty keep it up

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November 2020