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First of all, know the meaning of word Nidhi. As per section 406 of companies act 2013 Nidhi” means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefits.

 Nidhi companies are allowed to borrow from its members and lend to its members. Therefore, the funds contributed for a Nidhi company are only from its members (shareholders). Nidhi Companies are registered Limited Companies involved in taking deposits and lending to its members. The activity of a Nidhi Company does fall under the purview of Reserve Bank of India, as it is similar to a NBFC. However, as Nidhi Companies only deal with shareholder-members money, RBI has exempted Nidhi Companies from the core provisions of the RBI and other regulations applicable to a NBFC.

 A Nidhi to be incorporated under the Companies Act, 2013 shall be a public company and shall have a minimum paid up equity share capital of five lakh rupees.  Nidhi Company shall not issue preference shares. No Nidhi shall have any object in its Memorandum of Association other than the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.  Every Company incorporated as a “Nidhi” shall have the last words ‘Nidhi Limited’ as part of its name.


A Nidhi company shall not:-

1. Carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;

2. Issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;

3. Open any current account with its members;

4. Carry on any business other than the business of borrowing or lending in its own name:

5. Accept deposits from or lend to any person, other than its members;

6. Pledge any of the assets lodged by its members as security;

7. Take deposits from or lend money to any body corporate;

8. Enter into any partnership arrangement in its borrowing or lending activities;

9. Issue or cause to be issued any advertisement in any form for soliciting deposit:

10. Pay any brokerage or incentive for mobilizing deposits from members or for deployment of     funds or for granting loans.


Nidhi Company Registration Procedure


1. Obtaining DSC & DIN

Digital Signature Certificate (DSC) and Director Identification Number (DIN) are required for the proposed Directors of the Nidhi Company. DIN and DSC can be obtained for the proposed Directors within 5 to 7 days.

2. Name Approval & License

Once DIN and DSC are available for at least three Directors, application for reservation of name for Nidhi Company can be made to MCA. Name approval can be obtained in 3 to 5 working days.

3. Nidhi Company Registration

Once the name approval is obtained, registration documents can be submitted to the MCA along with an application for registration. MCA will usually approve the application for incorporation in 5 to 7 days, subject to their processing time.

And finally, you are ready to work as Nidhi Company after getting the Registration Certificate.

Written By:

Rahul Chaudhary

Team OnlineCompany