A Nidhi company is a public company formed to cultivate thrift among members, accepting deposits from and lending only to its members under Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014. It needs at least seven members, three directors and Rs 10 lakh paid-up capital, must reach 200 members and prescribed net owned funds, and must obtain a declaration by filing NDH-4.
What a Nidhi company can and cannot do
A Nidhi accepts deposits from members and gives loans to members against security such as gold, property or deposits. It cannot accept deposits from or lend to non-members, issue preference shares or debentures, or carry on chit fund, insurance or leasing business.
Conditions to meet
- At least 200 members
- Net owned funds of the prescribed minimum
- Net owned funds to deposits ratio not exceeding 1:20
- At least 10% of outstanding deposits held in unencumbered term deposits
Registration process
- Incorporate as a public limited company with Nidhi Limited in the name through SPICe+.
- Build membership and capital to meet the Rules.
- File NDH-4 to apply for declaration as a Nidhi.
- Operate as a Nidhi once declared.
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Get expert help →Ongoing compliance
- NDH-1 return of statutory compliances
- NDH-3 half-yearly return
- Regular ROC filings, audit and AGM
Frequently asked questions
Does a Nidhi company need an RBI licence?
No. A Nidhi company is regulated by the Ministry of Corporate Affairs under the Companies Act and Nidhi Rules, not licensed by RBI, though RBI can issue directions on deposits.
Can a Nidhi company open branches?
Yes, subject to conditions in the Nidhi Rules, such as having made profits in the preceding years, and generally only within the same district, with limits on the number of branches.
What interest can a Nidhi pay on deposits?
Interest on deposits cannot exceed the maximum rate that NBFCs can pay as prescribed by RBI, and loan interest cannot exceed the limit in the Nidhi Rules.
What happens if NDH-4 is not filed?
A company incorporated as a Nidhi after the amendment must obtain declaration by filing NDH-4. Without it, it cannot operate as a Nidhi and faces action for non-compliance.
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