A Nidhi Company is one that is categorized under the Non-Banking Financial Company (NBFC) which does not involve the Reserve Bank of India license. A Nidhi Company is acknowledged under section 406 of the Companies Act, 2013. This company works with the help of its members. Nidhi Companies formulated even before the Companies Act 1913. Their fundamental business is borrowing and lending money between its members. It is a mutually beneficial company. They are managed and controlled by the Ministry of Corporate Affairs. These companies deal with their shareholders only. There are some major compliances for Nidhi company.

Nidhi Company is based on the basic concept of “Principle of Mutuality” or “Paraspara Sahayata”. They function for the common benefit of all their members or shareholders.


To form Nidhi Company in India, you have to incorporate a Limited Company, under the Company Act 2013. A minimum of 3 directors and 7 shareholders are required to start a Nidhi Company incorporation process. Precautions must be taken to ensure that the aim of the Limited Company is that of saving its members, lending, and borrowing amongst its members only for their mutual benefit.

After incorporation as Nidhi, the company should have:

  • Minimum 200 shareholders
  • The company should have unencumbered deposits of not less than 10% of the outstanding deposits
  • The company must have Net Owned Funds (NOF) of 10 lakhs or even more
  • The ratio of Net Owned Funds to deposits should not be more than 1:20.


1) Within a period of 90 days from the end of its first financial year after it is incorporated, in the 2nd financial year a Nidhi company it has to file ITR return in a Form ‘NDH-1’ along with the applicable fee duly certified by the company secretary or a CA(Chartered Accountant) in practice.  This is one of the most important compliance among all other compliances for Nidhi company.

2) If in a Nidhi company registration, there is a failure to comply with the above-mentioned condition, it should apply to the regional director inform NDH-2 along with the fee for the extension of time within a period of 30 days from the close of the first financial year. The regional director may consider the application and pass the orders with 30 days of receipts of application.

3) A Nidhi Company covered under rule 2 shall file half yearly return from the registrar inform NDH-3 within 30 days from the conclusion of each half-yearly certified by the company secretary in practice with the prescribed fees.

NDH-1 is for the annual compliance of return.

NDH-2 is for the extension to the regional director.

NDH-3 is for half-yearly compliance which a Nidhi Company must file with the Registrar of Companies.


As per Rule 6 of Nidhi Rules a Nidhi incorporated company must not:

  • The continuing business of chit fund, insurance, hire purchase finance, or acquisition of securities by any corporate body
  • The issue of debentures or any other debt by any name or in any form
  • Current accounts with its members
  • lend or deposit money to other members other than the Nidhi members
  • Making a partnership arrangement in its borrowing or lending
  • Pay any brokerage or incentives for mobilizing deposits from members
  • Carry any business other than the business of borrowing or lending
  • Acquire any other companies by the purchase of securities.

Thus, these are the main compliances for Nidhi Company.


  • These are single office institutions that have no outside interference.
  • These are mutual benefit societies to build a habit of saving among their respected members and works for the benefit of their depositors and borrowers.
  • These funds are contributed by the members of the company.
  • The deposits are much lesser than handled by other institutions of the financial sector.
  • It does not require any Reserve Bank of India license.
  • These accept term deposits from its members only for timely and safe returns.
  • These provide easy loans to members. The repayment is limited to one year and seven years, against immovable property or jewelry as security.
  • Fewer interest rates are charged as compared to bank loan rates.

For more information regarding the secretarial compliances or annual compliances for Nidhi company, you can visit Company registration Online.

Related Topic: What is the difference between Chit Fund & Nidhi Company?

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