Nidhi company registration: incorporation, NDH-4, and the rules after
A Nidhi is a company that borrows from and lends to its own members, encouraging thrift within a community. It needs no RBI licence, but since 2022 it cannot call itself a Nidhi until the Central Government accepts its declaration in Form NDH-4.
Reviewed by Vijay Dhawan, Managing Partner, LexVerge LLP · Published
What a Nidhi can and cannot do
| Can | Cannot |
|---|---|
| Accept fixed, recurring and savings deposits from members | Accept deposits from or lend to non-members |
| Lend to members against gold, property, fixed deposits or other security | Do chit fund, hire purchase, leasing or insurance business |
| Open branches, subject to the Rules | Issue preference shares or debentures |
| Acquire another company’s securities, or pay brokerage for deposits |
Interest on loans is capped at 7.5 percent above the highest rate the Nidhi pays on deposits, calculated on a reducing balance.
Registration in two stages
Stage 1: incorporate a public company.
- At least 7 members and 3 directors.
- Minimum paid-up equity share capital of ₹10 lakh.
- The name must end with “Nidhi Limited”, and the only object must be cultivating thrift and savings among members and lending to them.
- Incorporated through SPICe+ on the MCA portal, which issues PAN and TAN with the certificate. See our name availability guide before choosing the name.
Stage 2: declaration as a Nidhi, within 120 days of incorporation.
- At least 200 members.
- Net owned fund of at least ₹20 lakh.
- Form NDH-4 filed with the fee, along with the fit-and-proper declaration for promoters and directors.
- The Central Government decides within 45 days; if it does not, the application is deemed approved.
If the company misses the 120-day window or the application is rejected, it cannot accept deposits or use “Nidhi” in its name.
Who can be a promoter or director
The 2022 amendment added fit-and-proper criteria. Broadly, promoters and directors must not have been convicted of offences involving fraud or moral turpitude, must not be disqualified as directors, and must not have been associated with a company that defaulted on repaying deposits. The declaration is filed with NDH-4, and a false declaration puts the whole application at risk.
Ongoing rules
| Rule | Requirement |
|---|---|
| Net owned fund to deposits | Deposits cannot exceed 20 times net owned fund |
| Unencumbered deposits | At least 10% of outstanding deposits kept in unencumbered term deposits with a scheduled bank or post office |
| Minimum members | 200 at all times |
| Form NDH-1 | Return of statutory compliances, within 90 days of the end of each financial year |
| Form NDH-3 | Half-yearly return, within 30 days of the end of each half year |
| Normal company filings | AOC-4, MGT-7, board meetings, AGM, statutory audit |
Nidhis are regulated by the Ministry of Corporate Affairs, not the RBI, though the RBI can issue directions on their deposits. A company that wants to lend to the public, rather than to its members, needs NBFC registration instead.
Nidhi, NBFC or co-operative credit society?
| Nidhi company | NBFC | Co-operative credit society | |
|---|---|---|---|
| Regulator | Ministry of Corporate Affairs | Reserve Bank of India | State or central Registrar of Co-operative Societies |
| Who it lends to | Members only | The public | Members only |
| Deposits | From members only | Only deposit-taking NBFCs, and no new licences for them | From members only |
| Entry capital | ₹10 lakh paid-up, ₹20 lakh net owned fund within 120 days | ₹10 crore net owned fund for a lending NBFC | Share capital from members; varies by state |
| Structure | Public limited company | Company | Co-operative society |
| Best for | Community thrift and small secured loans in one area | Commercial lending at scale | Community groups preferring co-operative governance |
A Nidhi is the only one of the three that combines company-law governance with member-only lending and a low capital bar, which is why it remains popular in South India for gold loans and small savings.
Timeline and common pitfalls
- Weeks 1 to 3: name approval and incorporation through SPICe+.
- Weeks 3 to 16: enrol members and raise the net owned fund. Enrolling 200 genuine members, each with KYC and a share or deposit, is the slowest part. Plan the membership drive before incorporating, not after.
- Before day 120: file NDH-4. The window cannot be extended, and a late filing means the company cannot operate as a Nidhi.
- Within 45 days of filing: decision, or deemed approval.
The usual reasons for rejection are members who exist only on paper, promoters who fail the fit-and-proper test, objects in the memorandum that go beyond thrift and member lending, and net owned fund counted from money borrowed rather than contributed.
Frequently asked questions
What is the minimum capital for a Nidhi company?
Paid-up equity of ₹10 lakh at incorporation, and net owned fund of ₹20 lakh within 120 days, when the NDH-4 declaration is filed.
How many members does a Nidhi company need?
Seven to incorporate as a public company, and 200 within 120 days of incorporation, maintained at all times after that.
What is Form NDH-4?
The application for declaration as a Nidhi, filed within 120 days of incorporation with proof of 200 members and ₹20 lakh net owned fund. The government decides within 45 days or it is deemed approved.
Does a Nidhi company need an RBI licence?
No. Nidhis are regulated by the Ministry of Corporate Affairs under the Nidhi Rules, 2014, though the RBI can issue directions on their deposits.
Setting up a Nidhi?
FilingBase incorporates the company, tracks the 120-day window, and files NDH-4 with the fit-and-proper declarations.
Keep reading.
NBFC registration in India
Who needs an NBFC licence, the net owned fund by category, how to apply on PRAVAAH, and cheaper routes for fintechs.
Read guide→GuideSection 8 Company: What It Is, How to Register One, the 12A and 80G Step, Compliance, and How It Compares With a Trust or Society
The non-profit company: permitted objects, licence through SPICe+, naming rules, 12A and 80G, CSR-1 and FCRA, annual filings, and penalties that reach ₹1 crore.
Read guide→GuideCompany Registration Cost in India (2026)
Government fee, stamp duty and professional charges separated — and the annual cost most quotes leave out.
Read guide→Official references
The statutory sources behind this page. We keep our guidance aligned to them — verify anything time-sensitive directly.
- Ministry of Corporate AffairsCompanies Act filings, forms and fee schedules
- Income Tax DepartmentReturns, forms, rates and e-filing utilities
- GST PortalRegistration, returns and rate notifications
Content on this page is reviewed by a chartered accountant or advocate at LexVerge LLP. It is general guidance, not advice on your specific facts.