# Nidhi Company Registration

> A Nidhi is a public company formed under Section 406 of the Companies Act to encourage thrift among its members, accepting deposits from and lending only to them. After incorporation it must, within 120 days, have at least 200 members and net owned funds of ₹20 lakh, and apply in Form NDH-4 to be declared a Nidhi by the Central Government. It can't take deposits from or lend to non-members.

Practice: Business Setup & Entity Registration — https://www.industax.com/services/business-setup/

The Nidhi (Amendment) Rules, 2022 changed the route. A company now incorporates as a public company with 'Nidhi Limited' in its name, and must apply for declaration in NDH-4 within 120 days of incorporation, along with a fit-and-proper declaration from its promoters and directors. The Central Government decides within 45 days.

A Nidhi lives under tight operating limits: net owned funds to deposits of no more than 1:20, at least 10% of outstanding deposits kept in unencumbered fixed deposits with banks, loans only to members against specified security, and half-yearly returns in NDH-3. We set these controls up before the first deposit is accepted.

## Key facts

| Item | Detail |
| --- | --- |
| Law | Section 406, Companies Act 2013; Nidhi Rules 2014 (amended 2022) |
| Within 120 days | 200+ members and net owned funds of ₹20 lakh+ |
| Declaration | Form NDH-4 to the Central Government |
| Ongoing ratio | NOF to deposits not more than 1:20 |
| Returns | NDH-1 (annual), NDH-3 (half-yearly) |

## Who needs this

- Community groups pooling savings and lending to members
- Promoters of mutual-benefit finance companies
- Existing Nidhis needing NDH-4 or compliance clean-up

## What's included

- Incorporation as a public company with Nidhi objects
- Member onboarding and share allotment records
- NDH-4 application with fit-and-proper declarations
- Deposit and lending policy aligned to the Nidhi Rules

## Documents

- KYC of 3+ directors and 7+ initial members
- Registered office proof
- Details of members admitted within 120 days
- Bank statements showing net owned funds

## Process

1. **Incorporate** — Public company with 'Nidhi Limited' in its name.
2. **Build** — 200 members and ₹20 lakh NOF within 120 days.
3. **Declare** — NDH-4 filed and Central Government decision received.

## Also covers

- **NDH-4 declaration** — Application for declaration as a Nidhi company.
- **Nidhi compliance** — NDH-1, NDH-3 and ratio monitoring.

## FAQs

### Is a Nidhi company regulated by the RBI?

Nidhis are notified under the Companies Act and are regulated by the Ministry of Corporate Affairs. The RBI has exempted them from most NBFC provisions, but it can issue directions on deposits, so a Nidhi must follow both the Nidhi Rules and any RBI directions that apply.

### Can a Nidhi company accept deposits from the public?

No. A Nidhi can accept deposits only from its members and lend only to its members. It also can't issue preference shares, debentures or other debt instruments, or open current accounts for members.

### What happens if NDH-4 isn't filed in 120 days?

The company can't operate as a Nidhi and can't accept deposits. Companies that miss the requirement face penalties and may have to convert their business or wind up, so the 120-day plan for members and funds must be in place before incorporation.

## Official sources

- Ministry of Corporate Affairs — MCA21 portal: https://www.mca.gov.in/

---
Canonical page: https://www.industax.com/services/business-setup/nidhi-company-registration
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.