Nidhi Company: Initiative for Secure Loans

Nidhi Company: Initiative for Secure Loans

NIDHI Company has evolved as a popular lending device for obtaining secured loans. It's a type of lending company that is formed to borrow and lend money to its members. It is a company registered under the Companies Act under Section 620A of the Companies Act, 1956.

What is NIDHI Company?

"NIDHI" standard form is National Initiative for Developing and Harnessing Innovations. NIDHI Company is a type of financial institution or an NBFC involved in depositing and lending money to its members.

Nidhi Company is registered as a Public Limited Company under the Companies Act, 2013. RBI's guidelines regulate & make Rules of Nidhi Company.

Nidhi companies are subject to regulation by the Reserve Bank of India because their operations are similar to those of NBFCs.

The company is formed for the members, so they only perform all the transactions. As such, the Company is not required to comply with the RBI’s fundamental regulations. Thus, differentiating it from an NBFC company.

Moreover, the principal reason behind incorporating this corporate structure is to encourage and motivate its members to save so that they can effortlessly satisfy their financial needs from time to time.

Additionally, Nidhi Company Registration is addressed in Section 406 of the Companies Act, 2013.

To be considered a “Nidhi” or “Mutual Benefit Society,” respectively, a corporation must be officially recognised as such by the Central Government by a publication in the Official Gazette.

Consultation for Legal Advice for Nidhi Company

Consultation for Legal Advice for Nidhi Company
  • Consultation to review documents such as agreements, leases, wills, court petitions, etc.
  • Mediation to help dispute parties to reach mutually agreeable settlements
  • Arbitration to settle the dispute
  • Preparation of legal documents
  • Legal advocacy including representation in litigation, arbitration, and legislative proceedings

A. Filing PART A of SPICE+ Form

    1. SPICE+ option available under MCA Services

    2. After clicking on SPICE+ next screen will pop-up

    3. Log in using the user id password or create one (if not any)

    4. After logging in, select "New Application".

    5. When you choose New Application next page will open in which you have to fill in the following details:

  • Type of Company
  • Class of Companies
  • Category of Companies
  • Sub-category of companies
  • The main activity of the company
  • Proposed names of the company

6. Next, choose 'Main division of industrial activity of the Company'. Mention the code of the industrial activities.

7. For the first level of automatic scrutiny, we have to click the 'Auto Check' of the proposed name, following the rules governing the same. We must submit Part A for name reservation or proceed with the incorporation.

8. After PART A of SPICE+ gets approved, you will receive Name Letter Approval in your mail. This Name Letter will be valid for 20 days; within the next 20 days, you must fill the PART B.

Consultation for Legal Advice for Nidhi Company

B. Filing PART B of SPICE+ Form

  1. Fill in all the details in PART B of the SPICE+ form as required
  2. Please upload any and all files listed in the Attachments section.
  3. Once the form is complete, pre-scrutinise the form and submit it.
  4. Along with PART B of SPICE+ form, file INC-9 and Agile Form.
  5. After submission of all forms, download all three forms, attach DSC, and file as Linked Form.
  6. Once the SPICE+ and AGILE are approved, License No, an Incorporation Certificate is granted, which will have the company's date of Incorporation, CIN Number, TAN and PAN.

Points To Remember About Nidhi Company Registration

The size of the form should not exceed 6 MB, as a form exceeding 6 MB in size cannot be uploaded on the portal.

All three forms shall be uploaded in the sequence of SPICe + Part B, AGILE Pro and INC-9.

Once all the forms are uploaded, an SRN, i.e., Service Request Number, is generated, and now you can make the payment.

Applicants can check the company's status through SRN on the MCA portal. Generally, MCA takes 4-7 days to respond to approve or to send for resubmission. A Certificate of Incorporation will be mailed to the applicant if the form is approved.


Only two resubmissions are allowed; after that, the form gets rejected, and the applicant has to again go through the process of filing the form for name reservation till the payment of fees. As the fees paid earlier will get lapsed. also offers Nidhi Company Registration to make lending money to members easier.

Importance Of Nidhi Company Registration

This arrangement, which includes deposits from and credit to its members (shareholders), is a particular component of the Nidhi firm and serves the mutual benefit of its members.

Nidhi Company Registration fall under a particular Non-Banking Financial Companies (NBFCs) classification.

These activities are controlled and administered according to the directives and tenets of the 1934 RBI Act. Be that as it might, the Nidhi businesses bargain only with their members.

However, the RBI gives these Nidhi firms specific tax assessments and yearly compliance exceptions. A Nidhi company is today governed by the Companies (Nidhi Companies), Rules of 2014 and Chapter XXVI of Companies Rules 2014. A Nidhi Company has many benefits.

By providing easy and convenient money-related administration, Nidhi Company Registration play a crucial role in helping middle and lower-white-collar classes. Because it is difficult for small workers to meet the basic requirements for credit and investment, Nidhi companies offer relief and should be allowed to grow under government supervision.

India is an attractive source of investment and credit. This is because only members can influence business decisions. It is not possible to include outside members. It is also not managed by trusts or advisory groups. It is an investment that financial professionals can only make. This is how members represent the collection of Nidhi assets.

The Companies Act governs Nidhi Company Registration offer authentic investments and activities. They fall under the purview of RBI orders, which oversee investments and money-related action. This includes acknowledgement exercises by a Nidhi Firm.

In reality, RBI has continuously passed orders pertinent to Nidhi’s. The Nidhi are currently prohibited from advancing advertising or deposit business.

The following are some of the essential benefits that a Nidhi business has to offer:

These minimal single-office foundations, which have no outside inclusion, offer deposits and advances at attractive rates to members with minimal documentation and conventions.

These mutual benefit societies aim to build a propensity to save and be thrifty among their members and offer benefits to investors and borrowers. People from the working class and middle class stand to gain substantially from the operation of these Nidhi corporations. This is one of the most significant benefits which business gain through Nidhi Company Registration.

Members added to the assets of a Nidhi firm. Furthermore, members can activate deposits from Nidhi companies later, much less than the ones dealt with by foundations of the combined saving money/budgetary sections.

The Nidhi companies are not qualified for direct exercises/organizations related to chit reserves, protection, procuring buy financing, renting funds, or obtaining securities offered by corporate bodies. The law also prohibits these Nidhi’s from issuing inclination shares, debentures or any other obligation instrument in any structure.

A Nidhi company Registration is not qualified by the law to acknowledge deposits from or offer credits to another individual or corporate body other than its members/shareholders. The Nidhi company is not legally authorized to borrow or lend. It is also against the law to give any encouragement or impetus for deposit requests or encouraging advances.

Points To Be Remember:

  • They accept term deposits from members in exchange for reasonable or secured returns.
  • These members can make secure and profitable investments.
  • They lend money to their members and borrow money. They offer mutual fund benefits and fund benefits.
  • These credits provide members with simple and valuable credits against various guarantees, such as gold and silver ornaments, relentless properties and settled deposit receipts.
  • NSCs and other Government securities are also available.
  • As security, the reimbursement period is limited to one and seven years for gems and stable property. Advances are available at meagre interest rates.

Assistance of Nidhi Company Registration

Nidhi Company Registration in India encourage thrift and saving among its members. All these companies are registered under the Companies Act as Public Company Registration. Nidhi Company's activities include lending and receiving deposits from its members. These companies are only allowed to do so for mutual benefit. They are not subject to the core compliance planning of RBI. To carry out their operations, they are not required to obtain any license from RBI.

Here are some of the benefits of Nidhi Company Registration India.

RBI Regulations Limited

Due to the RBI's restriction on dealing with funds other than members, the RBI regulations that apply to Nidhi Companies are limited. These companies all follow the Nidhi Rules 2014 of the centre regarding the Nidhi Companies' activities and work.

Minimum Capital Requirement

Initially, The Ministry of Corporate Affairs decided that Nidhi’s should have a minimum capital requirement of 5 lakhs INR. The Ministry of Corporate Affairs has only mandated that all Nidhi companies must have Net Owned funds of at least ten lakh rupees within one year of their registration.

Easy Formation

Unlike other NBFCs, Nidhi Companies don't need to obtain a license from RBI. They must incorporate themselves as a public corporation with the MCA and collect the required money according to the Nidhi Rules, 2014. It is similar to registering as a public Limited Company.

Saving To The Members

Members receive loans at a lower interest rate than the market rate. This allows you to make more savings for the members.

Channelize The Funds Properly

Nidhi Company Registration help to channel the funds. These companies aim to encourage thrift and to save among society's lower and middle sections. These tiny sections of the population contribute to the Nidhi Companies' funds and can take credit from them.

No Outside Interference

Nidhi businesses are managed and formed only by their members. The Nidhi’s are not permitted to interfere in the operation of these companies. They also prohibit outsiders from obtaining credit or depositing money.

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Frequently Asked Questions

Yes, the tax credit will be reflected in your 26AS form. However, the TDS claimed or claimed should be strict as per the TDS credit in form 26AS. If there is any difference in TDS deducted, which is reflected in 26AS, then it should be intimated to the deductor and reconciled. The Income-tax Department will grant the credit as per form 26AS.

Yes, failure to deposit TDS in the Government's account within the specified time limit would attract a penalty, interest, and rigorous imprisonment of up to 7 years.

Under Section 195, a person can file an application with the officer for handling non-resident taxation, who will pass an order determining the TDS to be made. Otherwise, if the recipient feels that the TDS is more, he may file an application with his Assessing Officer for non-deduction.

Yes, a payee can ask the payer not to deduct the Tax at source but for that payee have to furnish a declaration in FORM 15H/15G that the effect of Tax on his projected total income of the previous year after including the income on which Tax is to be deducted will be nil.
Form 15G is for an Individual or a person (other than a company or a firm)
Form 15H is for senior citizens

Sec 194J levies TDS on professional and technical services. As per the Companies Act, 2013 director of the company is also a manager and technical personnel. As per Section 194J (1) (ba), any payment made to the director like remuneration, sitting fees, or any other sum other than those on which tax deductible under section 192 is to be taken for deduction of Tax at source @ 10% under section 194J. Moreover, there is no threshold limit for deduction of Tax at source.

As per Income Tax Act, 1961, all business and government deductors/ collectors must file their TDS/TCS returns on electronic media (i.e., e-TDS/TCS returns). However, deductors/collectors can file in a physical or electronic form other than corporate/Government.

Director General of Income Tax (Systems) has been appointed the e-Filing Administrator by the CBDT for the electronic filing of TDS/TCS returns.

National Securities Depository Limited (NSDL), Mumbai, has been appointed an e-TDS/TCS Intermediary. NSDL only has established TIN-FCs across the country to help deductors/ collectors file their e-TDS/TCS Return.

It is mandatory to mention the Tax Deduction Account Number (TAN) in e-TDS/TCS return.

Yes, PAN is mandatory for deductors and employees/deductees. It is vital to quote the PAN of all deductees failing which credit of Tax deducted will not be given.

One can file their TDS/TCS return at any TIN-FCs managed by NSDL. TIN-FCs is nothing but a set-up at specified locations across the country. All details are available on the NSDL-TIN website.

It is the duty and the responsibility of the payer to deduct tax at source and if the payer fails to deduct tax at source, then payee will have to face adverse consequences. But, in such cases payee just have to discharge his tax liability. Thus, failure to deduct tax at source by the payer will not relieve payee from payment of the tax on his income.

The basic duties of the person liable to deduct at source are as follows:

  • To obtain Tax Deduction Account Number and quote the same in all the documents pertaining to TDS.
  • To deduct the tax at source at the applicable rate.
  • To pay the tax deducted by him at source to the credit of the Government (by the due date specified in this regard).
  • To file the periodic TDS statements, i.e., TDS return (by the due date specified in this regard*).
  • To issue the TDS certificate to the payee in respect of tax deducted by him (by the due date specified in this regard).

Non-reflection of TDS credit in Form 26AS can be due to numerous reasons like:

  • non-filing of TDS return by the payer
  • citing incorrect PAN of the deductee in the TDS statement filed by the payer

However, in case of non-reflection of TDS credit in Form 26AS, the payee has to contact the payer for learning the correct reasons for non-reflection of the TDS credit in Form 26AS.