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Deepti Shikha
| Updated: 29 Jan, 2020 | Category: Compliances, Nidhi Company

Compliances for a Nidhi Company: A Complete Checklist

Compliances for a Nidhi Company

A Nidhi Company is categorised under the Non-Banking Financial Company or NBFC, which does not involve the Reserve Bank of India (RBI) license. Section 406 of the Companies Act, 2013 acknowledges a Nidhi Company and is managed and controlled by the Ministry of Corporate Affairs. Their primary fundamental business is borrowing and lending money between its members. Nidhi Company is based on the concept of the ‘Principle of Mutuality’ or ‘Paraspara Sahaya’.Entities who wish to operate a lending business with low funds investment can opt for Nidhi Company. A Nidhi Company functions for the common benefit of all its members and shareholders. Section 406 of the Companies Act, 2013 and Nidhi Rules, 2014 prescribes some major compliance for a Nidhi Company.

Nidhi Company Registration in India

Nidhi Company is registered under the provisions prescribed in  Companies Act, 2013[1]. The only objective of forming a Nidhi Company is cultivating the habit of thrift and savings amongst its members. The minimum capital requirement to start a Nidhi Company is Rs.5 lakh. Since Nidhi Company is not bounded to receive a license from the Reserve Bank of India, hence it is easy to form. Moreover, it is registered as a Public Limited Company and must have “Nidhi Limited” as the last words of its name. Now we are aware of the process of Nidhi Company Registration in India so, let’s learn about the crucial compliances.

What are the Compliances of a Nidhi Company?

Compliances of a Nidhi Company are divided into three parts:

  • First is Pre-Incorporation Compliances,
  • Second is Post –Incorporation Compliances, and
  • Third is Event-based Compliances.

Know about the Pre-Incorporation compliances of Nidhi Company

Every Nidhi Company has to follow some mandatory compliance to obtain Nidhi Company Registration.

The necessary compliances to be followed are mentioned below:

  • Minimum of seven members is needed to start a Nidhi Company, out of which three members must be the Directors of the Company.
  • Minimum paid-up equity share capital of Rs. 5 lakh is required to start a Nidhi Company.
  • Not to issue preference shares and if it is issued the same to be redeemed as per the terms of the issue.
  • Nidhi Limited” must be used as part of the name.
  • Minor cannot be a member of a Nidhi Company.
  • A trust or body corporate cannot be admitted as a member of Nidhi Company.
  • Cannot accept the deposit of more than 20% of Net Owned Funds. 
  • Nidhi Company cannot open branches if it has not earned any profit after tax for consecutive three financial years. 
  • The rate of interest on the loan shall not exceed 7.5% above the highest rate of interest offered on deposits.

What is the Post –Incorporation Compliances of Nidhi Company?

Post Incorporation of Nidhi Company compliance is divided into two:

Incorporation Compliances of Nidhi Company

What are the General Compliances to be followed by a Nidhi Company?

The Nidhi Company must ensure the following compliances within a year of Nidhi Company registration:

  • The number of members should increase to at least 200 within one year of its incorporation.
  • The Net owned Fund should be Rs. 10 lakh or more.
  • The ratio of Net-owned Funds to the deposits must not exceed  1:20.
  • As prescribed in Rule 14 of the Nidhi Rules, 2014, the deposits should not be less than 10% of the outstanding deposits.
  • Maintenance of Books of Accounts.
  •  Maintain the statutory Registers.
  • Convene Statutory Meetings.

Read our article:Annual Compliance Checklist for Private Limited Company

What is the Annual Compliance of a Nidhi Company?

Annual compliance is followed to keep the Government updated on the activities and functional divisions of the company.

 It is mandatory for Nidhi Companies to follow annual compliances mentioned below:

Form No Compliance Due Date
Form NDH-1



Return of Statutory Compliance. This form contains all the details regarding members, deposits, loans, reserves etc. for the full financial year. e-Form GNL-2 for submission of the documents with the Registrar.




Within 90 days from the close of financial year along with fees. It must be duly certified by PCA/PCS/CMA.


Form NDH-2


Application for Extension of Time. This form is filled in case :
  • The company fails to add at least 200 members within one year of incorporation.
  • Failure to maintain the Net owned Fund to deposit ratio of 1:20
NDH-2 must be filed with the Regional Director within 90 days from the closure of financial year along with the prescribed fees.
Form NDH 3 Half-yearly return to be filed with the ROC (Registrar of Companies). Within 30 days from the conclusion of half a year. It must be duly certified by a practising professional.
  Annual General Meeting 30th September
Form AOC-4 For filing financial documents and other supporting documents to the Registrar of Companies. Within 30 days of the annual general meeting.
Form MGT-7

Annual Return Within 60 days of the Annual General Meeting.


ITR-6 Income Tax Return

By 30th September

What are the penalties for Non-Compliance?

Timely filing of compliances is mandatory for every Nidhi company. Non- Compliance attracts penalty for the Nidhi Bank Operators.

  • If the company does not meet the compliance, the organisation and the concerned officers will be fined an amount up to Rs. 5,000.
  • In the case of continuation of infringement, the company will be charged a further fine of Rs.500 per day.

Hence it is important to hire professionals to help in the compliance procedures.

What are Event-Based Compliances of a Nidhi Company?

Generally, event-based compliances are required to file only once during the company incorporation process. Furthermore, these compliances must be followed when there is any change in the company’s structure which are non-periodical in nature.

Below is the list of event-based compliances:

  • Any change in the company’s name.
  • Change in Registered office address.
  • Appointment or Resignation or Removal of Director.
  • Appointment or Resignation or Removal of Auditor.
  • Any amendment in the company’s objective.
  • Transfer of shares.
  • Increase in the authorised capital of the company.
  • Appointment of the Key Managerial Personnel.
  • Any other changes that are event-based.

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Conclusion

Nidhi Companies are easy to operate as there is less involvement of RBI. Still, they have to follow the compliances set up for them by the Companies Act, 2013 and the Nidhi Rules, 2014. Not following the compliances can subject to hefty penalties. The compliance process is a bit complicated, so it is always suggested in the best advice to take the help of professionals. You can contact Corpbiz, we have highly qualified CA’s, CS and other professionals who can help you sail through this complicated process.

Read our article:Annual Compliance of a Public Limited Company: Rules and Procedures

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Deepti Shikha

Deepti is a Law graduate with an avid interest in reading and very proficient in summarizing legal cases. She has enough experience in handling legal affairs of the company. In the initial days of her career, she has worked as a legal researcher and has 3+ years of experience.

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