Before You Apply for Nidhi Company Registration, Read This First!

Before applying for Nidhi company registration in India, it’s important to know the process of registration process. A nidhi company is not only a financial arrangement; it’s a community-based savings and lending scheme. It runs based on the faith of its members only.

Though the process of registering a Nidhi company is straightforward, it has some legal and compliance procedures to go through, which all the founders should know before registering.

Here in this blog, we’ll discuss in detail what you have to keep in mind before applying a Nidhi company registration and what you should know about it.

Whether you are beginning a business for the first time or want to venture into the finance industry, this blog will provide you with clarity and confidence during the process.

1. Knowing What a Nidhi Company Registration Is and Why It Is Important

You might already be aware that a Nidhi company is a Non-Banking Financial Company (NBFC) whose main function is to inculcate savings habits among members and offer them loans at reasonable terms.

But above all, it doesn’t need an RBI license. It is the easiest and most affordable option to venture into the financial services business in India.

The idea of a Nidhi company is extremely easy to comprehend – it encourages thrift and local self-reliance. Transactions are done only between members, hence they are transparent and trustworthy.

What are the reasons why entrepreneurs are choosing this model? Let’s find out in points:

• This creates a loyal member base that grows naturally.

• A substitute for informal lending is present.

• Steady income comes from interest returns.

• The immediate local communities benefit from easy access to funds.

But first, you have to know 3 things:

• Rules

• Registration Process

• Legal Responsibilities

2. The Entire Process of Nidhi Company Registration in India

A question that usually comes to every Indian founder’s mind is how to register a Nidhi company in India.

Let us analyze it thoroughly.

Even a small error can cause the whole process, from approval of name to documentation, to be delayed.

Let us discuss the Indian Nidhi company registration process step by step now:

Step 1: Choose a Company Name

The initial step is to select an appropriate and distinctive name. According to the regulation of Nidhi company name approval, the company name must be preceded by “Nidhi Limited” or else the name will not be approved. Please appreciate that the name must not be similar to an existing company or trademark. Additionally, the name should represent the ethical and philanthropic essence of your business.

Step 2: Get a Digital Signature Certificate and Director Identification Numbers

All proposed directors must have a Digital Signature Certificate and a Director Identification Number (DIN). Without these, you will not be able to file documents with the MCA.

Step 3: File Incorporation Documents with the MCA

In this, you need to file the Memorandum of Association (MOA), Articles of Association (AOA), identity proofs, address proofs, and declarations. These documents define the company’s main objective to limit savings and loans to members only.

Step 4: Minimum Capital and Member Requirements

The minimum capital required for a Nidhi company upon registration is 5 lakh. Find out what you need to do in one year in the points below:

• You must add at least 200 members in a year.

• New owned funds must be 10 lakh or more.

• Finally, the deposits to net owned ratio should not exceed 1:20.

It is necessary to fulfill the financial and membership conditions under the Companies Act, 2013, without which the process is impossible.

Step 5: Receive Certificate of Incorporation

Once the ROC verifies your documents, you will receive a Certificate of Incorporation. After this, you are registered as a public limited company and can begin your operations.

Step 6: Apply for PAN, TAN, and Open a Bank Account

After incorporation, PAN, TAN, and a current bank account have to be opened for company transactions.

If you submit all your documents on time and without any errors, the process won’t take long to complete. The only time-consuming delay is when the documents are incorrect and not submitted on time.

3. Nidhi Company RBI Guidelines and Compliance Checklist

Although a Nidhi company doesn’t need to register directly with the RBI, it is still necessary to follow certain RBI and MCA Rules.

Why?

This is to maintain stability and transparency in the financial system.

RBI Guidelines for Nidhi Companies

RBI does not regulate Nidhi companies like regular NBFCs, but some general guidelines are required in the public interest:

• Nidhi companies cannot engage in chit fund, hire purchase, insurance, or leasing business.

• They do not issue preference shares, debentures, or any other debt instruments.

• They only accept deposits from and provide loans to their members.

Nidhi Company Compliance Checklist

What steps does the Nidhi company have to follow to remain compliant? Pay attention to the points below:

• Form NDH-1 must be filled out within 90 days of incorporation, along with the details.

• Proper books of accounts and statutory registers must be maintained.

• If the 200-member requirement is not met in one year, an extension must be obtained through Form NDH-2.

• Annual returns and financial statements are filed with the ROC.

• Nidhi companies must follow profit and loan rules. Loans can be given only to members, not to anyone else, and the interest rate must be within the prescribed limit.

4. Conclusion

Applying for Nidhi company registration is crucial for entrepreneurs and their businesses, as it will help them grow. This model operates both in savings and lending, guided by trust and transparency. The key is to ensure that there are no discrepancies in planning, documentation, and compliance during company registration in India.

Our expert team of Company Registration Online assists entrepreneurs well, solves their problems, and helps them in their growth.

So, apply for Nidhi company registration without delay and give your business a boost with us.

Thank you for reading.

See you in the next blog!