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

What are Criteria and Fees for Nidhi Company Registration?

by Swati Raghuwanshi
Nidhi Company Registration

In India, a Nidhi company, often called a Mutual Benefit Company, is a kind of non-banking financial business, or NBFC.The Nidhi Company Registration can be done through the MCA and is regulated by the Reserve Bank of India (RBI).These organizations were established to encourage members to save, practice frugal living, and provide loans to members for their mutual gain. The statutory basis for the creation, management, and supervision of Nidhi Company in India is provided by 406 to 412 section of the Companies Act of 2013. To safeguard the best interests of the participants and the public as a whole, they make sure Nidhi Companies operate in compliance with the established policies and procedures of the law. Such entities are governed by the guidelines of the Reserve Bank of India. In order to understand these companies in depth, keep reading the blog. 

What is a Nidhi Company? 

In Sanskrit, “Nidhi” means “treasure.” Therefore, Nidhi companies function primarily as depots or streams of money that are gathered from the people who belong to them. It was described in Sections 406-412 of the Companies Act, 2013. These parts particularly address the Nidhi Company incorporation, nidhi registration, operation, and rules. 

What is the Need To Establish a Nidhi Company?

In India’s financial sector, Nidhi companies fulfill a variety of functions and demands. Following are a few explanations for the Nidhi Registration:

  • Nidhi Companies offer an avenue for borrowing on a small scale to members of an organization or a particular group. 
  • They satisfy the credit needs of people who may not have access to standard banking services by providing loans for their members at fair interest rates.
  • Although Nidhi companies function based on the concepts of trust and mutual benefit, they are defined by the Nidhi Rules of 2014 and the Companies Act of 2013. 
  • The openness, responsibility, and defense of savers’ or members’ rights are guaranteed by this legal structure.
  • Nidhi companies provide a formal, regulated alternative for people who depend on unofficial sources of credit, such as moneylenders. 
  • They aid in the prevention of abuse and unlawful loan activities that are common within the unofficial credit market by offering loan remedies that are inexpensive.
  • Anyone who joins a Nidhi company becomes a co-owner and has a voice in how the company is run. 
  • Participants are empowered by a sense of ownership, which also promotes collaboration and mutual gain.

Essentials for Nidhi Company Registration in India 

For the Nidhi Company Registration, a few prerequisites must be fulfilled which are given below: 

  • The Nidhi Company must have at least 7 members when it is formed.
  • At least three directors must be appointed to Nidhi Company and must be residents of India.
  • The minimum paid-up capital must be Rs. 5 lakh.
  • Under the standards for naming provided by the Ministry of Corporate Affairs (MCA), a Nidhi Company’s name must conclude with the term “Nidhi Limited.” “ABC Nidhi Limited” or “XYZ Mutual Benefit Nidhi Limited,” for instance.
  • It’s important to use the MCA website or an expert’s assistance to perform a name availability search before deciding on a name. It’s imperative to confirm that the selected title does not violate any current trademarks.
  • During the formation of Nidhi Company, an address for the registered office must be given inside the borders of India. This address needs to be current in order to receive papers, as it will be utilized for official correspondence.

Important Document Required For Nidhi Company Incorporation 

Some of the key documents for the Nidhi Company Registration are: 

  • The MOA describes the objectives, goals, and range of its operations. 
  • The AOA describes guidelines for managing rules and operating the Nidhi Company.
  • Identity Verification for Directors and Shareholders 
  • To confirm the permanent locations of directors and employees of Nidhi Company, it is necessary to present your address-proof documents
  • For identity and tax purposes, all directors and members must produce their Permanent Account Number cards.
  • To verify correctness and conformity with the law, certain papers, such as the MoA, AoA, and statement of conformity, should need to be certified by a licensed company secretary, a professional CA, or an advocate.
  • A bank statement, Affidavits, NOC, Digital signature certificate,Power of Attorney, Stamp duty receipts and many others required during registration of a company .

Process of Nidhi Company Registration 

Follow the steps given below in order to register a Nidhi Company in India: 

Company Name Approval

You must verify that the suggested name of the Nidhi Company is acceptable to the Ministry of Corporate Affairs (MCA) and is accessible before submitting an incorporation application. After confirmation, the name is valid for a predetermined amount of time typically 20 days during which the formation application needs to be submitted.

Submitting the Incorporation Request

The next phase is to get the incorporation application ready and send it to the RoC online and in person at an authorized office. All the documents, like MOAs, AOAs, and ID proofs, should be attested with the application. Make sure you will submit the application with the respective authorities after checking it twice. 

Documents Evaluation

The RoC starts the document verification procedure as soon as it receives the incorporation application. The filed documents are carefully examined to make sure they meet every necessary law and the criteria of the Companies Act of 2013. The legitimacy, fullness, and reliability of the data given in the documents are confirmed by the RoC.

Corrections and Modifications

The ROC can request clarification or corrections from the company or its designated agents within a specific period, typically 15 days, to fix these problems and resubmit the rectified documents. This will unnecessarily delay your registration procedure hence make sure you will submit all the details correctly the first time. 

Certificate of Incorporation Issue

The RoC issues the Certificate of Incorporation after rechecking all necessary paperwork is in place and the business has met all legal requirements. This certificate allows the company to start doing business and acts as final evidence of its incorporation. The company name, registration number, time, and office location can be found in the Certificate of Incorporation.

Begin of Company

The Nidhi Company may start doing business after receiving the Certificate of Registration. But it’s crucial to remember that a Nidhi Company is unable to begin lending operations unless it has fulfilled a few more standards outlined in the Nidhi Rules, 2014, including a certain number of members and net-owned funds.

Fees for Nidhi Company Incorporation in India 

In order to get the idea about fees for Nidhi Company read the following details: 

Stamping Duty

The Memorandum of Association (MoA) and Articles of Association (AoA) are among the incorporation documents of Nidhi Company on which stamp duty is charged. The capital and the jurisdiction of the company in which it registers determine how much stamp duty is charged. In this process, the company uses a higher percentage of either the amount of authorized capital or the issued market value of the shares.

Fees for ROC

The Registry of Companies is responsible for collecting fees to process incorporation applications and issue Certificates of Incorporation. The authorized funding of the Nidhi company being dependent is one of the two criteria that affect the RoC fees. In general, companies with more authorized capital pay more. 

Professional Charges

For their assistance with the Nidhi registration procedure, professionals like chartered accountants, company secretaries, or advocates may be paid a professional fee. These experts offer insightful advice on how to submit the application and make sure all legal criteria are met. The range of work rendered and the intricacy of the registration process determine professional fees.

Charges for Digital Signature Certificates (DSCs)

To be able to execute the Nidhi Company online registration, you must have a Digital Signature Certificate (DSC). Approved agencies get fees in exchange for acquiring DSCs for the company’s customers or executives. The kind and duration of the certificate determine the DSC fees. The process of registering may involve other unrelated costs, including notary public fees, courier fees, name reservation fees, or any other paperwork needed by the authorities.

Guidelines and Compliance for Nidhi Companies 

Following Nidhi Company Registration, such entities need to comply with the Nidhi Rules of 2014 and the Companies Act of 2013

Prohibitions/ Restrictions for Nidhi Companies

By following these restrictions, Nidhi Companies can continue to support their members’ access to reasonable loan alternatives, encourage frugal living, and assist in conserving money while still abiding by the legal structure that oversees their business practices. The restrictions serve to make sure Nidhi companies refrain from doing anything that could endanger their employees and go against the law. They also make sure they aren’t operating beyond the specified scope.

Chit Money Schemes

Nidhi companies are prohibited from participating in chit fund schemes. These are created by combining the money of multiple individuals for a set amount of time, after which the combined cash is given. Hence we can say that this scheme is not for such kind of companies, hence they cannot avail them. 

Stock Dealing

The main goals of Nidhi companies are to offer loans to their members and encourage savings and frugality. Engaging in any securities or share trading is restricted by Nidhi companies. Therefore, they are prohibited from purchasing, disposing or dealing in any of the bonds or other kinds of securities that can be traded on the stock market.

Lending to Non-Members

Nidhi companies aren’t allowed to lend money or make advances to organizations or people who are not a part of their organization. A Nidhi Company’s main goal is to give its participants financial support for their mutual benefit. They are not like banks who can provide financial support to anyone. 

Nidhi Rules Compliance 

The Nidhi Rules (2014) offer comprehensive guidelines that govern the operations of Nidhi companies. These guidelines cover matters like formation, membership loan constraints, and more. Without following these rules and regulations or we can say Nidhi rules one cannot for such kind of entity.

Fines and Penalties against Nidhi Companies 

Nidhi Companies may be subject to fines for breaking the Companies Act of 2013’s provisions and restrictions. Revocation of Nidhi Registration, fines for infractions, penalties for directors who engaged in acts of non-compliance, compounding of offenses, and legal actions leading to fines are some examples of penalties. Nidhi Companies must abide by regulatory regulations in order to prevent fines, legal ramifications, and possible closure.


Nidhi companies are essential to the advancement of financial literacy, savings practices, and frugal living in India. Under the auspices of shared benefit, these companies which are regulated by the Companies Act of 2013 and the Nidhi Rules of 2014 offer consumers reasonably priced loan choices while promoting neighborhood collaboration and savings. To proceed with the Nidhi Company Registration procedure, you must fulfill certain prerequisites, including membership, minimum money, and compliance with regulations. 

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