Nidhi Company Registration
A Nidhi is a mutual benefit company that lends only to its own members. Incorporation is the easy half; the conditions you must meet in the first year are what decide whether it survives.
Be clear what a Nidhi can and cannot do
A Nidhi exists to encourage saving among its members. It takes deposits from members and lends to members — that is the whole permitted business. It is not a route to running a general finance company, and the restrictions are real.
- It cannot lend to or take deposits from anyone who is not a member
- It cannot issue preference shares, debentures or any other debt instrument
- It cannot open current accounts for members, or do chit fund, hire purchase, insurance or securities business
- It cannot advertise for deposits from the public
If your plan needs any of the above, a Nidhi is the wrong vehicle and you should know that before incorporating rather than after.
The first-year conditions
| Requirement | What it means |
|---|---|
| Members | At least 200 within the first year |
| Net Owned Funds | At least Rs 20 lakh. This was Rs 10 lakh under the original 2014 rules and was doubled by the Nidhi (Amendment) Rules, 2022 — older guides online still quote the old figure |
| NDH-4 | Filed within 120 days of incorporation to apply for recognition as a Nidhi |
| NOF to deposit ratio | Not more than 1:20 |
| Unencumbered term deposits | At least 10% of outstanding deposits |
If NDH-4 is not filed in time, the company cannot accept deposits or lend — which leaves it incorporated but unable to do the only thing it was formed to do. If the Central Government does not respond within 45 days of NDH-4, approval is deemed granted.
Dates, fees and form numbers on this page were checked on 5 September 2026. Government timelines change; if you are reading this much later, confirm with us before you rely on it.
Where these fail
The 200-member requirement is the one that catches people. Seven or ten founders can incorporate comfortably; finding a hundred and ninety more genuine members inside a year is a different problem, and it is not one paperwork solves. Promoters who cannot see where those members are coming from should think hard before starting.
The Rs 20 lakh net owned funds figure is equity and free reserves less accumulated losses and intangibles — not simply money in the account. We would rather map both of these against your actual position before incorporation than tell you about it in month eleven.
Common questions
Send us your case
Tell us how many members you can realistically bring in and what capital is available. We will tell you honestly whether a Nidhi fits before you spend on incorporation.
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