Nidhi Company Registration in India: Process, Benefits and Compliance
A Nidhi Company is a non-banking financial entity (regulated under Section 406 of the Companies Act) that accepts deposits from and lends only to its own members — a mutual benefit structure popular for community-level savings and credit societies. It needs a minimum of 7 members and 3 directors at incorporation.
Post-incorporation requirements within 1 year
- Minimum 200 members
- Net Owned Funds (NOF) of at least ₹20 lakh
- Net Owned Funds to deposits ratio not exceeding 1:20
- Unencumbered term deposits of at least 10% of outstanding deposits
Registration process
- Incorporate as a Private Limited company via SPICe+ with "Nidhi" in the name and the stated object of cultivating savings/thrift among members
- Within 120 days of incorporation, file Form NDH-1 confirming compliance with member/NOF requirements (or NDH-2 to seek extension)
- File annual returns NDH-3 (half-yearly) and continue regular ROC compliance (AOC-4, MGT-7)
What a Nidhi Company cannot do
It cannot issue preference shares, open current accounts for non-members, carry on chit funds, hire-purchase, insurance, or any business other than lending/borrowing among members. It also cannot advertise for deposits from the general public.
Why businesses choose this structure
Lower regulatory burden than an NBFC (no RBI license needed, since Nidhis are exempt from core NBFC registration), while still legally enabling member deposit-taking and lending — useful for community finance, employee welfare funds, and local credit groups.
Considering a Nidhi Company? Our incorporation team handles the specific NDH filings this structure requires.