Nidhi Company Registration

Nidhi Companies in India are created for cultivating the habit of thrift and savings amongst its members. Nidhi companies are allowed to borrow from their members and lend to their members. The funds contributed to a Nidhi company are only from its members (shareholders). These companies are not comparable to the banking sector but serve to cultivate a saving habit in a group.

Nidhi Company Overview

Nidhi Companies are registered Limited Companies involved in taking deposits and lending to their members. These activities fall under the purview of the RBI but are exempted from core provisions as they only deal with shareholder-members.

Restrictions on Nidhi Company

As per Rule 6 of Nidhi Rules, 2014, a Nidhi Company shall NOT:

• Carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities.
• Issue preference shares, debentures or debt instruments of any kind.
• Open any current account with its members.
• Acquire another company without proper approval and resolution.
• Engage in any business other than borrowing or lending in its own name (locker services allowed under limits).
• Accept deposits or lend to non-members.
• Pledge members’ assets or accept them as security.
• Advertise deposit schemes publicly.