A mutual benefit company that borrows from and lends to its own members only. No RBI licence is required, but the post incorporation conditions are strict and time bound.
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TIMELINE
MINIMUM MEMBERS
GOVERNED BY
LENDS TO
The company is incorporated as a public limited company with Nidhi Limited in the name and objects restricted to mutual benefit activity.
Within the prescribed period after incorporation, the company must reach the minimum member count and net owned fund level set by the Nidhi Rules.
Form NDH-4 is filed to obtain declaration as a Nidhi. Failure to meet the conditions blocks this.
NDH-1, NDH-3 and the usual company annual filings follow on their own cycles.
Incorporating a Nidhi is straightforward. Staying one is not. Within a defined window after incorporation the company must reach the prescribed number of members and net owned funds, maintain the prescribed ratio between net owned funds and deposits, and file NDH-4 to be declared a Nidhi. Companies that incorporate without a realistic plan to reach those numbers end up unable to obtain the declaration, and unable to lawfully carry on the business they incorporated for.
No. Nidhi companies are exempted from most RBI regulation because they deal only with their own members, but they are governed by the Nidhi Rules under company law.
No. Both deposits and lending are restricted to members. Dealing with non members is a breach of the Nidhi Rules.
Chit funds, hire purchase, leasing, insurance and acquisition of securities issued by any body corporate are all prohibited.
Yes, subject to conditions in the Nidhi Rules, including profitability requirements and limits on the states in which branches may be opened.
The company cannot obtain or retain Nidhi status, and may be required to stop accepting deposits or convert to another form.
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