{"id":14043,"date":"2024-10-16T16:03:38","date_gmt":"2024-10-16T10:33:38","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=14043"},"modified":"2024-11-08T11:15:56","modified_gmt":"2024-11-08T05:45:56","slug":"what-is-nidhi-company","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/what-is-nidhi-company\/","title":{"rendered":"What is Nidhi Company? Meaning, Example &#038; Registration Process"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e8fc8ed8359\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e8fc8ed8359\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/what-is-nidhi-company\/#What-is-Nidhi-Company\" >What is Nidhi Company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/what-is-nidhi-company\/#Nidhi-Company-Example\" >Nidhi Company Example<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/what-is-nidhi-company\/#List-of-Nidhi-Companies-in-India\" >List of Nidhi Companies in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/what-is-nidhi-company\/#Eligibility-for-Registering-Under-Nidhi-Company\" >Eligibility for Registering Under Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/what-is-nidhi-company\/#Documents-Required-for-Nidhi-Registration\" >Documents Required for Nidhi Registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/what-is-nidhi-company\/#Nidhi-Company-Registration-Process-and-Procedure-A-Step-by-Step-Guide\" >Nidhi Company Registration Process and Procedure: A Step-by-Step Guide<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-Nidhi-Company\"><\/span>What is Nidhi Company?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A Nidhi company is a type of non-banking financial company (NBFC) in India that focuses on borrowing and lending money among its members, who are also shareholders. The primary objective of a Nidhi company is to help its members save money and borrow money when they need it.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Nidhi-Company-Example\"><\/span><strong>Nidhi Company Example<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Imagine a small community of friends and neighbours in a rural village. They decide to form a Nidhi Company to support each other financially.<\/p>\n<h3>How Nidhi Company Works?<\/h3>\n<h4>STEP 1: Register for Membership<\/h4>\n<p>Anyone in the community can join the Nidhi Company by becoming a member.<\/p>\n<h4>STEP 2: Make Regular Deposits<\/h4>\n<p>Members contribute a regular amount to a common fund.<\/p>\n<h4>STEP 3: Apply for Loans<\/h4>\n<p>When a member needs a loan, they can apply to the Nidhi Company. The loan is typically granted from the accumulated savings of the members.<\/p>\n<h4>STEP 4: Interest Rates for Loans<\/h4>\n<p>The interest rates on loans are usually lower than those offered by banks.<\/p>\n<h4>STEP 5: Governance<\/h4>\n<p>The Nidhi Company is managed by a committee of members.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"List-of-Nidhi-Companies-in-India\"><\/span>List of Nidhi Companies in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>Here&#8217;s the example of Nidhi companies in India:<\/strong><\/p>\n<ul>\n<li><strong>Saraswat Nidhi Limited:<\/strong> One of the oldest Nidhi companies, focusing on savings and loans for its members.<\/li>\n<li><strong>Matrubhumi Nidhi Limited:<\/strong> Encourages savings and provides loan facilities to its members.<\/li>\n<li><strong>Siddhivinayak Nidhi Limited:<\/strong> Aims to promote savings while offering personal loans and other financial products.<\/li>\n<li><strong>Karnataka Nidhi Limited:<\/strong> Focuses on creating a savings culture among its members and offers loans.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Eligibility-for-Registering-Under-Nidhi-Company\"><\/span>Eligibility for Registering Under Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3>1. Minimum Number of Shareholders<\/h3>\n<p>A Nidhi Company must have at least 200 shareholders within one year of registration. This is mandatory for maintaining the company&#8217;s registration status.<\/p>\n<h3>2. Net-Owned Funds Requirement<\/h3>\n<p>To register as a Nidhi Company, a minimum of \u20b910 lakh in net-owned funds is required. This includes equity share capital and free reserves minus any accumulated losses and intangible assets.<\/p>\n<h3>3. Unencumbered Term Deposits<\/h3>\n<p>The company must hold unencumbered term deposits equivalent to at least 10% of its total outstanding deposits. Any amount lower than this disqualifies the company from registration.<\/p>\n<h3>4. Funds-To-Deposits Ratio<\/h3>\n<p>The net-owned funds-to-deposits ratio should not exceed 1:20. This ensures that the company\u2019s deposits are proportionate to its owned funds, maintaining financial stability.<\/p>\n<h3>5. Company Name<\/h3>\n<p>The name of the company must include &#8216;Nidhi Limited&#8217; to be eligible for registration as a Nidhi Company.<\/p>\n<h3>6. Public Company Status<\/h3>\n<p>All Nidhi Companies must be registered as public companies under the Companies Act.<\/p>\n<h3>7. Paid-Up Equity Share Capital<\/h3>\n<p>The registering company must have a minimum paid-up equity share capital of \u20b95 lakh to qualify for Nidhi Company registration.<\/p>\n<h3>8. Compliance Filings<\/h3>\n<p>The company must file Form NDH-1 within 90 days of the end of its first financial year once all conditions are met. This form must be certified by a practising Chartered Accountant (CA), Company Secretary (CS), or Cost and Works Accountant (CWA).<\/p>\n<h3>9. Request for Extension<\/h3>\n<p>If the company fails to meet the requirements within the first financial year, it can apply for an extension by filing Form NDH-2 with the Regional Director within 30 days of the financial year\u2019s end.<\/p>\n<h3>10. Penalties for Non-Compliance<\/h3>\n<p>Failure to meet the necessary conditions by the end of the second financial year will result in the company being prohibited from accepting deposits, and penalties may be imposed until compliance is achieved.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Documents-Required-for-Nidhi-Registration\"><\/span>Documents Required for Nidhi Registration<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>The following are the required documents for Registering as a Nidhi:<\/strong><\/p>\n<ul>\n<li>Proof of registered business address (ownership documents\/rent or lease agreement)<\/li>\n<li>No Objection Certificate (NOC) from the owner\/landlord<\/li>\n<li>Identity and address proofs of members<\/li>\n<li>Photos and PAN card copies of members<\/li>\n<li>Digital Signature Certificate (DSC)<\/li>\n<li>Director Identification Number (DIN) of directors<\/li>\n<li>Memorandum of Association (MoA) with the objective of promoting thrift and savings among members, accepting deposits, and providing loans to members only<\/li>\n<li>Articles of Association (AoA)<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Nidhi-Company-Registration-Process-and-Procedure-A-Step-by-Step-Guide\"><\/span>Nidhi Company Registration Process and Procedure: A Step-by-Step Guide<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><strong>STEP 1: Apply for DIN and DSC<\/strong><\/h3>\n<p>Obtain a Director&#8217;s Identification Number (DIN) and a Digital Signature Certificate (DSC) for all directors. If any director already has a valid DIN and DSC, they can skip this step.<\/p>\n<h3><strong>STEP 2: Draft the MoA &amp; AoA<\/strong><\/h3>\n<p>Prepare the Memorandum of Association (MoA) and Articles of Association (AoA), which outline the company&#8217;s objectives and operations. Submit these to the Registrar of Companies (ROC) for approval.<\/p>\n<h3><strong>STEP 3: Name Approval<\/strong><\/h3>\n<p>Submit three unique name options to the MCA for approval. Once approved, the name is reserved for 20 days, allowing time to complete other formalities.<\/p>\n<h3><strong>STEP 4: File for Registration<\/strong><\/h3>\n<p>After name approval, file the registration application with the ROC, including the MoA, AoA, and other necessary documents.<\/p>\n<h3><strong>STEP 5: Issuance of Certificate of Incorporation<\/strong><\/h3>\n<p>The ROC reviews the application and issues a Certificate of Incorporation (CIN) within 15\u201320 days, officially recognizing the company.<\/p>\n<h3><strong>STEP 6: Apply for PAN, TAN, and Bank Account<\/strong><\/h3>\n<p>Apply for a PAN and TAN for the company. After receiving these, open a company bank account using the Certificate of Incorporation, MoA, AoA, and PAN.<\/p>\n<h3>Conclusion<\/h3>\n<p>A Nidhi company is a type of non-banking financial company (NBFC) in India that encourages its members to save and provides easy access to loans. Operating on the principles of mutual benefit, Nidhi companies foster financial discipline and offer affordable financial services to their members, promoting economic growth and financial stability within their communities.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is Nidhi Company? A Nidhi company is a type of non-banking financial company (NBFC) in India that focuses on borrowing and lending money among its members, who are also shareholders. The primary objective of a Nidhi company is to help its members save money and borrow money when they need it. Nidhi Company Example<\/p>\n","protected":false},"author":151156465,"featured_media":14438,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3367],"tags":[4023,4024],"class_list":{"0":"post-14043","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business-glossary","8":"tag-nidhi-company","9":"tag-what-is-nidhi-company"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/14043","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156465"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=14043"}],"version-history":[{"count":7,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/14043\/revisions"}],"predecessor-version":[{"id":14137,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/14043\/revisions\/14137"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/14438"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=14043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=14043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=14043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}