Section 406 of Companies Act 2013 and Companies (Nidhi Companies) Rules, 2014 govern Nidhi companies. A Nidhi company has been incorporated with the following objectives:

1. Imbibing the habit of thrift and savings amongst its members

2. Receiving and lending deposits from/to its members for their mutual benefit, which complies with rules of Chapter XXVI of Companies Rules, 2014.

Nidhi means ‘treasure’. In the financial sector, however, it means any mutually beneficial society that has been notified by the centre, which tries to cultivate the habit of savings among its members.

The companies doing Nidhi business are known under different names like Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company.. They are mutual benefit societies as their dealings are restricted to its members and the membership is limited. The source of funds for such a society is the contribution from its members. Loans thus given out are at reasonable rates and most of the loans are for construction of house, or repairs. Loans are generally secured.

Since most of the funds come from the members, deposits thus raised by a Nidhi company are not much as compared to the organized banking sector.

Since Nidhis come under one class of NBFCs, the RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, since Nidhis deal with their shareholder-members only, RBI has exempted such notified firms from the core provisions of the RBI Act and other directions applicable to NBFCs. As on date (February 2013) RBI does not have any specified regulatory framework for Nidhis.

Requirements for Nidhi Company

• A Nidhi company that has to be incorporated under this Act shall be a public company;

• It must have a minimum paid up equity share capital of Rs.5,00,000/-;

• There will be no issuances of preference shares. If such shares had already been issued by a Nidhi Company before commencement of this Act, such preference shares are to be redeemed in accordance with the terms of issue of such shares;

• The objective of such a firm would be to imbibe in the members a habit of thrift and saving and the services would only be restricted to its members;

• The name must have Nidhi Limited

What services are covered in this plan?

• Registration  with DSC

• DIN

• Name Approval

• Incorporation Fee

• PAN

• TAN

• Share Certificates

• Company kit

Documents to be submitted

• Address proof of directors

• Citizenship proof

• Photo ID proof of directors

• No objection certificate from the owner

• Passport size photos of directors

• Rent agreeement of your registered office

• Self declaration about your directorship in other companies

• Specimen signature