NIDHI Company Registration - All You Need to Know

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Contact our Nidhi company consultant for expert assistance.

What is NIDHI Company Registration? 

National Initiative For Developing and Harnessing Innovations (NIDHI) is a financial institution or NBFC that involves deposits and money lending to its members. Moreover, NIDHI company is registered under the Companies Act, 2013, and is governed according to the guidelines of the Reserve Bank of India (RBI)

However, as NIDHI company deals with its shareholders only, RBI has exempted notify NIDHI company from core RBI Acts, and other directions apply on NBFC. 

In simpler words, NIDHI is the company that is incorporated with the motive of cultivating the habit of thrift, saving among its members, receiving deposits from members, and lending money to its members for their mutual benefit.

Who regulates the NIDHI company?

The Ministry of Corporate Affairs regulates the NIDHI company. Though the Company Act provisions regulate NIDHI companies, they are exempted from specific Act provisions applicable to other companies.

Is NIDHI company a Non-Banking Financial Company (NBFC)?

NBFC included NIDHI company in its definition, which works fundamentally in the unorganized money market. But, on the contrary, since 1997, NBFCs are majorly regulated by RBI. 

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Benefits of NIDHI Company Registration

Formation of a NIDHI company is easy because you have to fulfill a few requirements. Some of the conditions you are required to satisfy are, 

  • To commence a NIDHI company, you must at least have seven members. Out of seven, three must be appointed as directors.
  • Effortless registration process.
  • Easy and hassle-free documentation.

Moreover, from earlier mentioned points, it is clear that the NIDHI company’s formation is easy and less complex.

Net-owned funding signifies a transaction where the owner invests money in a business to increase the funds for the same. As mentioned earlier, the net owned funding ratio of a NIDHI company is 1:20, so, for instance, if you would invest Re. 1 in a business, you could raise the fund of Rs. 20 from the same. 

Thus, this feature of NIDHI company makes it cost-effective for new business owners, helps diversify the business, and grows the business with more capital.

By its nature, NIDHI company is a kind of NBFC, which RBI regulates. However, RBI has provided its exemption from stringent compliances. Thus, NIDHI company follows the NIDHI Rule, 2014, which guides the activities and working of a company. 

As per NIDHI Rules, 2014, NIDHI companies can accept deposits and give loans to their members, reducing the risk of non-payment of loans compared to other financial businesses. 

Thus, it is the safest passageway to provide loans to its members at low-interest rates, increasing member savings.

Applicability of NIDHI Rules (Rule 2)

  • Under sub-section (1) of Section 620A, Companies Act,1956, companies declared as NIDHI or Mutual Benefit Society.
  • The company incorporated as a NIDHI company pursuant under the provisions of Section 406 of the Act.
  • A company is functioning on the lines of NIDHI company or Mutual Benefit Society. However, either does not has applied for registration as a NIDHI company or Mutual Benefit Society or has applied for registration or is waiting for a notification to be a NIDHI or Mutual Benefit Company under Companies Act, 1956 and sub-section (1) Section 620A. 

Requirements For NIDHI Incorporation

The name of the company must use the suffix, “Nidhi Limited.”

A NIDHI company must have at least 200 members.

A NIDHI company must have net-owned funds of ten lakh or more.

The net owned funds deposit ratio should not be more than 1:20, which means that for every equity, NIDHI company can borrow twenty times.

Unmortaged term deposit below 10% of outstanding deposits as mentioned in Rule 14.

Documents Required For NIDHI Company Registration

  • Passport size photographs. 
  • Digital signature certificate (DSC).
  • NOC signed by owner or landlord.
  • Director Identification Number (DIN).
  • Memorandum of Association (MOA) and Article of Association (AOA).
  • Address proof and residence proof.
  • Passport, in case the company includes foreign directors. 
  • PAN Card for the company’s financial transaction and taxation process.

Our Nidhi company consultant will invest their sustain efforts in providing high-standard services to our clients. Thus, we will ensure a smooth procedure.

To make the process of registration unchallenging, our finest Nidhi company consultant team will educate you concerning registration process without any hassle and challenge. Above all, we guarantee to avoid any inaccuracy.

NIDHI Company Registration Process

To commence the NIDHI company registration process, first, procure the Digital Signature Certificate and Director Identification Number. 

Next, for name approval, you are required to file an MCA application. For this, the name of the company should be unique and must not violate intellectual property rights. 

After filling the application, submit the required documents to the Registrar of Companies, through INC Form 32, including MOA, AOA, and mention the fundamental objective of establishing the NIDHI company. 

After reviewing the documents, the company can obtain the certificate of incorporation. 

As you obtain the certificate of incorporation, you are required to apply to obtain PAN and TAN.

At last, open a bank account on the business’s behalf for money transactions. 

Our Role in Nidhi Company Registration

We will provide you with complete support in the process of registration.

We have a team of experts who will provide you with assistance in documentation.

Our Nidhi company consultant will ivest our sustain efforts in findig the most appropriate name of the company.

We will assist you in keeping track of your application.

 Our experts will provide you with the most satisfactory solution to your concern.

Ministry under which NIDHI registration done

Conclusion

As it seems, Nidhi company registration seems to be a wise decision because it provides various advantages such as increase funds, less regulations, and low risk of non-payment of loans, which is why, it is considered important to register a Nidhi company.  

However, obtaining the same could not be as easy as it seems because it requires proper knowledge regarding documents required for Nidhi company registration and filling in the relevant details in the application. If not, it could result in the rejection of an application. 

Consequently, JR Compliance, with experience of 8+ years, has Nidhi company consultant who guarantee to provide you prompt assistance from the first to last step of registration.

Hence, for expert and professional services, contact us immediately.

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