A Nidhi company is one of the simplest ways in India for a group of people to run a lawful savings-and-lending institution for their members. It cannot do business with the general public — only with its own members — which keeps it low-risk and relatively easy to set up compared with a bank or NBFC. Here is how the process works in 2026, in plain language.

What is a Nidhi company?

A Nidhi company is a type of public limited company registered under the Companies Act and governed by the Nidhi Rules. Its sole objective is to cultivate the habit of saving among its members and to lend to them. Members deposit savings (SB, RD, FD) and borrow against the pool. Read our introduction to Nidhi companies if you're new to the concept.

Who can start one — basic eligibility

  • Minimum 7 members and 3 directors to incorporate.
  • A minimum equity share capital (commonly cited as ₹10 lakh) to begin.
  • The name must end with the words "Nidhi Limited".
  • It must be incorporated as a public limited company.

The step-by-step process

Step 1 — Get DSC and DIN

Each proposed director needs a Digital Signature Certificate (DSC) to sign forms online and a Director Identification Number (DIN).

Step 2 — Reserve the company name

Apply for name approval through the MCA portal (RUN/SPICe+). The name must be unique and end with "Nidhi Limited".

Step 3 — Incorporate the company

File the SPICe+ incorporation forms with the Memorandum (MOA) and Articles (AOA), stating that the company's object is to carry on the business of a Nidhi. On approval you receive the Certificate of Incorporation, PAN and TAN.

Step 4 — Meet the first-year requirements

This is the step most founders underestimate. Within one year of incorporation, a Nidhi must typically:

  • Have at least 200 members.
  • Maintain Net Owned Funds (NOF) of ₹20 lakh or more.
  • Keep the NOF-to-deposit ratio within the prescribed limit (commonly 1:20).
  • Hold unencumbered term deposits as required.

These ratios must then be reported to the MCA (through the relevant NDH forms). Missing them is the most common reason Nidhi companies get into trouble.

Step 5 — Set up operations and records

Open the company bank account, create member onboarding and KYC processes, define your deposit and loan products, and — critically — put a proper accounting and member-management system in place from day one.

Ongoing compliance

  • File half-yearly and annual NDH returns and standard company annual filings.
  • Hold board meetings and an AGM, and maintain statutory registers.
  • Maintain the required membership, NOF and ratio levels continuously.
  • Get accounts audited each year.
Start with the right system. The Nidhi companies that stay compliant are the ones that track members, deposits, loans, NOF and ratios automatically from day one. See how Nidhi Pro by Shronix handles this, or request a demo.

Common mistakes to avoid

  • Treating it like a general finance business — a Nidhi can serve only its members.
  • Ignoring the one-year membership and NOF targets until it's too late.
  • Running on registers or spreadsheets, so interest and balances drift and audits become painful.
  • Promising returns or taking deposits in ways the Nidhi Rules don't allow.

The bottom line

Registering a Nidhi company is straightforward; staying compliant is where the real work lies. Plan for the 200-member and ₹20 lakh NOF targets from the start, keep clean books with purpose-built software, and get professional help for your filings. Do that, and a Nidhi is a genuinely powerful, community-rooted way to help members save and borrow.

Frequently asked questions

How many members do I need to start?

Seven to incorporate, but at least 200 within the first year to stay compliant.

Can a Nidhi company lend to non-members?

No. A Nidhi can accept deposits from and lend only to its own members.

Do I need RBI approval?

Nidhi companies are notified under the Companies Act and regulated primarily by the MCA/Central Government rather than requiring a separate RBI licence, though they fall within the broader NBFC framework. Always confirm current rules with a professional.

This article is for general education only and is not legal advice. Nidhi and company rules change; confirm current MCA requirements and thresholds with a qualified company secretary or chartered accountant before acting.