Checklist For A Nidhi Company

• - A minimum of seven members is required to start a Nidhi Company out of which three members must be the directors of the company. However, it should acquire a minimum of 200 members within one year of commencement
• - A minimum of 5 lakh rupees, is required as the equity share capital to start a Nidhi Company. This entire amount has to be paid up. However, within one year of registration, the net owned funds should be 10 lakh rupees or more. This includes equity share capital and free reserves and excludes accumulated losses as well as intangible assets
• - Unencumbered term deposits must be 10% or higher of the outstanding deposits
• - The ratio of net owned funds to deposits shouldn’t be more than 1:20, where 10% of the total deposits are in a fixed deposit account of a nationalized bank

What are the 10 things Nidhi Companies cannot do as an NBFC (Non-Banking Financial Company)?

Cannot conduct other businesses
• A Nidhi Company cannot carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by anybody corporate whereas an NBFC engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities, leasing, hire-purchase, insurance business, chit business

Current Accounts
• As the Nidhi Company is a mutual benefit institution, the government is against the commercialization of such companies and hence does not give it the authority to start current accounts. Therefore, users do not have the option of opening a current account under the Nidhi Scheme

No Advertisements
• Nidhi Companies are not allowed to advertise or solicit anyone in the hope of gaining a deposit. However, they are allowed to advertise their capacity to grant loans

Preference Share Capital or Debentures
• A Nidhi Company is not allowed to use preference share capital or debentures to raise funds for itself

Brokerage
• Such companies are not allowed to provide any incentive or brokerage for mobilizing deposits or granting loans

Deposits from Non-members
• A Nidhi Company does not have the right to accept deposits from individuals who are not members of the Company. Lending and depositing are features that are available only to members, and hence the circulation and handing over of money occur only within members of the community

Service Charge
• The Company does not have the right to charge any member a service charge for acquiring membership to the Company

Membership Restrictions
• A Nidhi Company cannot add a corporate body as its member and hence taking deposits from such institutions

Branches
• A Nidhi Company is not allowed to open a second office as a subsidiary branch in India until it attains a profit three years in a row

Boundaries
• A Nidhi Company is not allowed to open a branch outside its state of origin in India

Procedure for Nidhi Company Registration

Contrary to what you might think, registering a Nidhi Company is a simple 3-Step process and can be done completely online. We’ve laid it out below.

• - Name Reservation – We help you reserve your name with MCA
• - DSC and DINs – We help you get 1 DSC and 3 DINs
• - Documents and approval – We help you at every stage of the documentation process and in getting in-principle approval from the RBI

Documents Required for Nidhi Company Registration

To Be Submitted By All Directors

• - Self-attested copy of PAN Card
• - Self-attested copy of Driver’s License/ Voter ID/ Aadhaar Card/Passport
• - Self-attested copy of Bank Statement/ Telephone Bill/Mobile Bill/ Electricity Bill
• - Passport-size Photograph
• - Specimen Signature Certificate