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The Nidhi Company was established to create a pathway for borrowing and lending money among community members. In India, a registered company functions as a non-banking financial company (NBFC).
It was designed to encourage the members to save and thrift within a certain range. In short, the registered Nidhi company acts as the NBFC for the businesses. Such companies are monitors of the mutual benefits. This signifies that the members can borrow money or provide it to each other.
In the fast-growing era, how can a business start financially as a Company? In this comprehensive guide, we will explore the route for Nidhi company registration with benefits, disadvantages, and many more. Let’s explore this page in more detail.
The Introduction For Nidhi Company Registration
Imagine a group where each other is interested in helping. The individual in a group borrows or lends money at a reasonable interest rate. This is where the Nidhi company guidelines work accurately. As earlier mentioned, the Nidhi Limited is a type of non-banking financial company (NBFC).
The activities and the operations of such companies are operated by the Ministry of Corporate Affairs in India. This corporate structure is regulated by the Nidhi Rules, 2014, along with the Companies Act, 2013.
The aim was to motivate a group of members to develop saving habits and support them during financial needs. However, the general public is restricted from taking a loan from a Nidhi Company.
This implies that the members of such a company are permitted to accept deposits from fellow members and lend money exclusively to its members. The distinct framework of online Nidhi company registration offers several benefits.
For the startups that want to open a small financial institution in India, they can register as a Nidhi Limited company. The benefits associated with Nidhi company registration position it as one of the preferred options.
Also Read: Secure Your Financial Future with Nidhi Company Formation
Why Register a Nidhi Company for Your Financial Startup?
Multiple reasons determine why Nidhi registration is the best choice:
- Easier Regulatory Compliance: The other NBFCs need to obtain a license to establish a financial organization. But in Nidhi registration, there is no need to secure a license from the Reserve Bank of India (RBI). The regulations of this financial company’s structure are seamless. The Nidhi Rules, 2014, have fewer compliance requirements, which is crucial for a seamless registration process.
- Lower Capital Requirement: For the financial institution establishment, a group needs to invest in a large amount. Which means, for the financial startup, you need to provide a large amount of capital. In the case of the company process, the minimum capital requirement is lower. It can start from Rs 10 lakhs. For the aspiring entrepreneurs, its minimum paid-up share capital requirement makes an easy route. Without worrying about capital requirements, you can build a financial institution in India.
- Mutual Benefit and Low Risk: Under the Nidhi Company Act, the fear of loan defaults is less. This is because such organizations only deal with groups of members. The members belong to a recognized community. Nidhi registration creates the pathway of trust and confidence. It is crucial to maintain the financial reputation of a company.
- Simple Business Model: Nidhi company, the regulation model, is more straightforward. It means the members are only liable to deposit and provide the amount to each other. In short, the general public is not allowed to borrow or lend money from a registered organization. The simple model structure eliminates the complexity.
- Perpetual Succession: The Nidhi company also guarantees perpetual succession, like the other private companies. It means the company is free from its members and the directors. Its existence will continue even if the director leaves or dies. It will continue as it was designed initially.
- Encourages Savings: The primary objective of establishing the Nidhi rules is to foster thrift and savings. The members of such companies can manage their savings by getting attractive interest rates on loans and deposits.
Also Read: Incorporate Your Nidhi Company Online – Now at 20% OFF
The Nidhi Formation: Important Considerations
| Considerations | Explanation |
| No preference shares | In India, the registered Nidhi Company is restricted from issuing preference shares. |
| No Current Accounts | Members of a Nidhi company are prohibited from opening a current bank account. |
| Restrictions | Under the Nidhi Company Act, such companies are not allowed to involve any chit funds or other business activities. They can deal only among the members to borrow or lend money. |
| Minimum members | Within one year of Nidhi company formation, it is mandatory to have at least 200 members. |
The Nidhi Company Registration Process in India: Step-by-Step
For the Nidhi company formation, the applicants need to follow several key steps. Well, all these steps can be filled out through an online company registration process. Here is an overview of business formation in India:
Step 1. Obtain the DSC and DIN
Given that the entire company registration process is conducted online, the appointed directors must acquire a Digital Signature Certificate. With the help of DSC, the people of the sign as the signatories can be eligible to sign electronic documents digitally.
After obtaining the DSC, the proposed members are required to obtain a Director Identification Number. The DIN, which acts as a unique identification number, is issued by the MCA.
Step 2: Selected Name Approval
The name approval for the registration process is vital. For Nidhi registration, it is necessary to choose three distinct names. Furthermore, the proposed name must contain “Nidhi Limited” at the end.
The name will be checked by the Ministry of Corporate Affairs to ensure whether it meets the company name rules or not. The applicant submits the proposed names through the RUN (Reserve Unique Name) service. After the successful verification, the name will be valid only for 20 days.
Step 3: Drafting MoA and AoA
These two documents contain the important details for the business registration in India.
The Memorandum of Association (MoA) certificate is required because it defines the core objectives of a Nidhi-registered company. It explains which activities your company can do.
A Nidhi Limited registration company’s internal rules and regulations are defined in the Articles of Association (AoA). It signifies how the company will be managed, the meeting process, and the responsibilities of proposed directors.
The applicant must draft the MoA and AoA in accordance with the Nidhi Rules, 2014, and the Companies Act, 2013.
Step 4: Filing the SPICe+ Form
This is another important step in the online Nidhi company registration process. The Simplified Proforma for Incorporating Company Electronically Plus is in web form, which is important to join multiple certificates into one. This step makes the company registration procedure smoother. In this form, you can attach:
- The information about the Nidhi Company formation
- The proof of proposed Nidhi company members, like PAN, address proof, and other details.
- Obtained a DIN (Director Identification Number) for members
- Application for the PAN and TAN for the organization.
- Application for company incorporation, PAN, and TAN.
Step 5: Verification and Issuance of COI
After the complete process of document submission and the mandatory registration fee, the ROC will verify the application. The Registrar of Companies will check all documents against the application form details.If your application adheres to the regulations and compliance set forth by the authority, the ROC will issue the Certificate of Incorporation.
After the issuance of CIN, your company will officially register as a Nidhi company. CIN is the official certificate proof. ROC will also issue the company’s Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
Note: From securing the DSC/DIN to obtaining the COI from the ROC, the process takes 15-25 days. The days can be increased if you fail to meet the requirement or provide the wrong document.
Also Read: 2025 Nidhi Company Setup in Bengaluru
Final Words | Online Nidhi Company Registration in India
The Nidhi Company Act is the balance sheet for the registered companies. It offers a comprehensive rule that forces the members to focus on savings. The experts of company registration online will guide you from the eligibility requirements to the new company registration process, so you will be eligible to form your Nidhi company in India. Contact our professionals to start your business online registration process.
Frequently Asked Questions
1. What is the cost for Nidhi company formation in Delhi?
Ans. The Nidhi registration process fee includes the consultant fee and the government fees. The total amount starts from Rs 20,199. To establish a non-banking company in Delhi, you need to at least spend Rs 20,199.
2. Is it safe to invest in a Nidhi company?
Ans. Probably not; investing in such a company carries inherent risks. Before investing, you should carefully research.
3. Is RBI permission required for Nidhi registration?
Ans. No, Nidhi companies are a type of NBFC. This means there is no need to take approval from the RBI.
4. What is the interest rate of registered Nidhi businesses in India?
Ans. The interest rate for fixed deposits and recurring deposits is 12%. Whereas, the savings account interest rate is 6% in India.
5. How is a Nidhi company different from a chit fund?
Ans. Under the Nidhi Rules, 2014, it is designed for lending and borrowing money among the members. Whereas, in the chit fund known as the committee, the members contribute installments, and one member receives the lump sum in turn.
