Saturday, April 13, 2024
Saturday, April 13, 2024

How to Get Loans Under the Nidhi Scheme?

by Vartika Kulshrestha
Nidhi Scheme

The essential source of help for small and micro business owners in India is the Nidhi Scheme, which offers financial aid through non-banking financial organizations. Applying for loans under the Nidhi Scheme can be a fairly easy process if you meet the prerequisites and comprehend the basic steps. You can apply for loans under the Nidhi Scheme with the assistance of this detailed instruction. Small-scale enterprises depend on Nidhi firms for financial support, which is essential to their empowerment. Functioning as non-banking financial entities, their primary objective is to provide members with financial offerings such as savings options and credit facilities. The Nidhi Scheme stands as a reliable pillar of financial assistance for eligible individuals, crafted to cater to their monetary necessities.

What is Nidhi Company

Nidhi companies are financial institutions regulated by the Ministry of Corporate Affairs in India. They cater primarily to the financial needs of their members, accepting deposits and providing loans. Before obtaining Nidhi company registration, let’s delve in details about it.

Key Characteristics of Nidhi Companies

  • Membership-Centric: Nidhi companies exclusively serve their members, fostering a close-knit financial community.
  • Non-Profit Orientation: Nidhi companies operate with a “not for profit” mindset, focusing on the welfare of their members.
  • Limited Lending Scope: Nidhi companies can extend loans solely to their members, promoting financial inclusivity.

Eligibility Criteria for Nidhi Loans

The eligibility criteria for loans under the Nidhi Scheme is:

1. Membership: To be eligible for a loan from a Nidhi company, one must first become a member. The typical criteria for membership include:

a) Indian citizen.

b) At least 18 years old.

c) Possess a valid KYC (Know Your Customer) document.

2. Accumulated Savings: Most Nidhi companies stipulate that their members maintain a minimum savings balance in their accounts, with the specific amount varying from one company to another.

3. Active Membership Period: You should maintain an active membership with the Nidhi company for a defined period, typically determined by the company and ranging from 6 months to 2 years.

4. Loan Purpose Alignment: Nidhi companies often have specific loan purposes, such as education, business ventures, or housing. Ensure your loan purpose aligns with the company’s guidelines.

What is the Nidhi Scheme?

The Nidhi Scheme is crafted to nurture a supportive atmosphere conducive to the expansion and flourishing of startups, thereby cultivating an ecosystem rich in innovation across the nation. As an integral component of the National Initiative for Developing and Harnessing Innovations (NIDHI), the scheme is characterized by several pivotal elements:

  • Innovation Promotion: Aims to advance the innovation ecosystem in India.
  • Entrepreneurial Support: Provides support to entrepreneurs to convert their ideas into prototypes.
  • Funding Assistance: Offers financial support for developing prototypes and scaling startups.
  • Incubation and Mentorship: Includes incubation and mentorship programs for early-stage startups.
  • National Coverage: Targets to facilitate at least 100 innovators annually across the country.
  • Technology Development: Encourages the development and commercialization of indigenous technologies.
  • Ecosystem Strengthening: Strengthens the network of incubators and accelerators in India.
  • DST Initiative: Initiated by the Department of Science & Technology of the Indian government.

The Application Process

The application process to get loans under the Nidhi Scheme is as follows:

1. Filling Out the Loan Application: After meeting the eligibility criteria, you can move forward with the loan application. This process encompasses these steps:

a) Obtain an application for loans under the Nidhi Scheme.

b) Complete the form with precise and complete details.

c) Attach all required documents and proofs.

2. Essential Documentation: Typically, the documentation required for a Nidhi loan application includes:

a) KYC documents (like Aadhar card, passport, driver’s license).

b) Proof of residence (e.g., electricity or telephone bills).

c) Passport-sized photographs.

D) Bank statements.

E) Proof of income (such as salary slips or income tax returns).

3. Specifying Loan Amount and Tenure: In your application, clearly state the desired loan amount and your preferred repayment period. The maximum loan amount available will depend on your savings and the policies of the Nidhi company.

4. Clarifying Loan Purpose: Unambiguously articulate the loan’s intended use in your application. Offer specific details to help the Nidhi company understand how you intend to utilize the loan.

The Loan Approval Process

The approval process for loans under the Nidhi Scheme is as follows: 

1. Application Verification: The Nidhi company will scrutinize your loan application and the attached documents to assess your eligibility based on the previously mentioned criteria.

2. Credit Assessment: A credit appraisal is conducted to determine your repayment capacity. This process involves reviewing your income, existing loans, and savings with the Nidhi company.

3. Approval Committee Involvement: Nidhi companies usually have an approval committee to review loan applications. Once your application is approved, you’ll be notified of their decision.

4. Loan Agreement Review: Once your loan receives approval, the Nidhi company will provide a loan agreement. It’s crucial to thoroughly read and comprehend the terms and conditions.

Receiving the Loan

The process to receive the after applying for loans under the Nidhi Scheme is:

1. No Collateral Required: The loans under the Nidhi Scheme are generally unsecured, meaning you won’t need to provide any collateral or security. However, some Nidhi companies may request a personal or third-party guarantee.

2. Disbursement Process: The Nidhi company will transfer the loan amount directly to your bank account. Ensure you have an active bank account in your name to facilitate this.

3. Ensuring Proper Use of the loan: The amount exclusively for the specified purpose indicated in your application. Keep records of your expenses to maintain transparency.

Repaying Nidhi Loans

Here how the repayment of the loans under the Nidhi Scheme happens:

1. EMI Calculation: Nidhi loans typically come with Equated Monthly Installments (EMIs). The EMI amount is determined based on the loan amount, tenure, and interest rate. The Nidhi company will provide you with a schedule of EMIs.

2. Timely Repayments: Punctuality is crucial when it comes to making EMI payments. Delays can result in penalties and potentially impact your creditworthiness with the Nidhi company.

3. Loan Closure: Upon full repayment of the loan amount and associated interest, the loan will be considered closed. Ensure you receive all necessary documents and a no-dues certificate from the Nidhi company.

Exempted Loans Nidhi Scheme 

The exempted categories from loans under the Nidhi Scheme are: 

  • The Nidhi Companies are not allowed to lend money or advance any personal loans based on income tax returns or the reputation of the borrower.
  • Lending money or granting advances to businesses that finance automobiles is forbidden for the Nidhi Companies. Since these categories demand a net worth of Rs. 2 crores, only NBFCs that have registered are allowed to participate.
  • It is also forbidden for the Nidhi Companies to lend money to the hire purchase business or to provide any kind of loan advances.
  • Not to mention, the requirement stipulates that the total amount of allowed deposits cannot exceed 20% of the net held funds. Moreover, a business or a trust is not permitted to have stock or membership in the company.


Obtaining a loan through the Nidhi Scheme can be an invaluable financial resource for those seeking small loans under the nidhi scheme without the complexities associated with traditional banking institutions. By understanding eligibility criteria, following the application process, and adhering to the repayment schedule, you can maximize the benefits of the Nidhi Scheme. Keep in mind that Nidhi companies may have varying policies and requirements, so staying well-informed about your chosen company is essential. Armed with this knowledge and a well-prepared loan application, you can secure the funds you need to achieve your financial objectives.

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