Nidhi Company

Difference between Nidhi Company and Co-Operative Society

calendar15 Feb, 2023
timeReading Time: 5 Minutes
Difference between Nidhi Company and Co-Operative Society

A Nidhi company is a non-banking finance corporation that offers financial services to its members. At the same time, a Co-operative Society is a mutual aid organization owned and controlled by its members for their mutual benefit. Both of these organizations provide their members with access to loans, savings, and other financial services. However, there are a few differences between them. There are several options available when it comes to investing money or looking for financial services, including Nidhi Company and Co-operative Society.

What Do You Mean By A Company

A Company is a business organization created and registered in accordance with the laws of particular countries. The corporation is a different legal entity from its owners; it has legal standing to engage in agreements, bring legal actions and be sued, as well as to own property. Companies are employed as a means of carrying on business, making money and offering clients products or services. A board of directors is responsible for managing a corporation; they are chosen by the shareholders. The board of directors is in charge of managing the business operations and taking crucial decisions, including developing the corporate strategy, making investments, and selecting executives. 

What is Nidhi Company and Co-operative Society?

You can check the meaning of Nidhi Company and C0-operative Society below:

Meaning of Nidhi Company

The Nidhi Company is a type of non-banking financial company that operates in India. It is specifically made to meet the financial needs of those who belong to a defined community, such as those who live in a particular region (geographical area) or a group of people with similar interests. A Nidhi Company is required to register with the Companies Act of 2013 and receive a certificate of company commencement. This certificate stands as a testament to the company’s legitimacy and its right to conduct business as a financial institution.

  • Key Features of Nidhi Company
    • A Nidhi Company must always be a Public Company, having the minimum paid-up equity capital of Rs. Five Lakh. 
    • The membership-based structure is one of the distinctive features of a Nidhi Company. To be eligible for loans and other financial services from the company, members must own shares in the company. 
    • The Nidhi Company must have minimum of seven members and minimum three directors.
    • A Nidhi Company has to add “Nidhi Limited” as the last word in the name of the company.
    • The Net owned Funds of a Nidhi Company should be Rs. Ten Lakh or more, this protects the members and guarantees that the company has enough resources to carry out its duties.
    • A Nidhi Company’s principal operational activities include taking deposits from and lending money to its members.
    • A Nidhi Company is prohibited from issuing preference shares or debentures, or any other debt instruments.
    • A Nidhi company cannot, for borrowing or lending, enter into any partnership agreement.
  • Nidhi Company That Are Registered In India

Below mentioned are some of examples of Nidhi companies registered in India:

  1. Alandur Praja Sahya Saswatha Nidhi Limited
  2. Sriman Madhwa Sidhantaonnahini Permanent Nidhi Limited
  3. Paraspara Sahaya Nidhi (Perambur) Ltd
  4. Shenoy Nagar Saswatha Nidhi Ltd
  5. Jeya Bharath Benefit Fund Limited
  6. Canara Nidhi Limited
  7. Mini Muthoottu Nidhi Kerala Limited
  8. Varthaka Mandal Nidhi Ltd

Meaning of Co-Operative Society

A co-operative Society is a type of organization that functions on the principle of collective ownership and control. It is designed to meet the economic and social needs of its members. Co-operative societies are profit-driven organizations that seek to increase the marketability of the goods produced by labour-intensive industries like agriculture. The formation of Co-operative societies is done with the aim of protecting the interest of the weaker sections of society. 

Based on the recommendation of the Mirdha committee and the Model Co-operative Societies Act, the Government of India passed the Multi-State Co-Operative Act in 2002[1], ensuring the democratic and independent function of co-operatives.

  • Key Features of Co-Operative Society
    • The formation of co-operative societies is totally voluntary in nature. The membership is open to everyone.
    • A co-operative society must be registered under Multi State Co-Operative Act in 2002.
    • The co-operative society has to maintain accounts for a independent auditor to audit.
    • The state government controls and supervises the co-operative society
    • In co-operative societies, there is limited liability.
    • The voting rights are given to all members. The managing committee is elected.
    • The principle of mutual help & welfare is present.
    • When members enter or exit the co-operative societies, it does not affect the co-operative society.
    • The members of the co-operative society can get quick loans.
    • Exempted from the Income Tax up to a certain earning.

Examples of Cooperative Society

  1. National Co-operative Land Development Banks Federation Limited,
  2. National Federation of State Co-operative Banks Limited,
  3. National Co-operative Union of India Limited
  4. National Agricultural Co-operative Marketing Federation of India Limited
  5. National Co-operative Consumer’s Federation of India Limited
  6. National Federation of Co-operative Sugar Factories Limited
  7. National Federation of Industrial Co-operative Limited
  8. National Co-operative Housing Federation Limited
  9. Indian Farmer’s Fertiliser Co-operative Limited
  10. All India Federation of Co-operative Spinning Mills Limited
  11. All India Industrial Co-operative Banks Federation Limited
  12. National Co-operative Dairy Federation of India Limited
  13. National Heavy Engineering Co-operative Limited
  14. All India Handloom Fabrics Marketing Co-operative Society Limited
  15. National Federation of Urban Co-operative Banks and Credit Societies Limited
  16. Krishak Bharati Co-operative Limited, New Delhi
  17. National Federation of Fishermen’s Co-operative Limited
  18. National Federation of Labour Co-operative Limited
  19. National Co-operative Tobacco Grower’s Federation Limited
  20. Tribal Co-operative Marketing Development Federation of India Limited
  21. *Petrofils Co-operative Limited, Vadodara, Gujarat: Under Liquidation

Difference between Nidhi Company and Co-operative Society

Following is the difference between Nidhi Company and Co-operative Society:

  • One of the main differences between the Nidhi Company and Co-operative Society is their legal status. The Nidhi Company is registered as a limited company under the Companies Act 2013. While the Co-operative Society is registered under the Co-operative Societies Act 2002.
  • In the Nidhi Company, there is a board of Directors that are appointed for the management and control, while in Co-operative society, a committed is elected by the members that manage and control the Co-operative Society.
  • The reputation and perceived trustworthiness of Nidhi Company and Co-operative Society may differ. The Nidhi Company may be seen as more professional and stable, while a Co-operative society may be seen as more community-oriented and friendly.
  • A Nidhi Company is subject to regulations by the Ministry of Corporate Affairs. On the other hand, a Co-operative Society is regulated by the State Government and appointed Registrar of Co-operative Societies.
  • A Nidhi Companies’ main objective is to provide financial services to its members. The Co-operative Society aims to promote the economic and social well-being of its members.
  • A Nidhi company operated within the geographical boundaries of India. The Co-operative Society have a wider area of operation, including international operations.
  • A Nidhi Company is required to submit financial statements and reports on a regular basis to the Ministry of Corporate Affairs, while Co-operative societies are not subject to such requirements. 
  • A Nidhi company has some specific membership criteria that should be fulfilled. There should be200 members within one year from the date of incorporation of a Nidhi company. A Nidhi Company cannot make a trust or a body corporate its member. The co-operative society does not have any membership criteria. It is open to all.  


Both the Nidhi Company and Co-operative Society play a crucial role in providing financial services to individuals and communities. However, they differ in terms of membership criteria, services offered, regulation and ownership structure. While Nidhi companies are non-banking finance companies that cater specifically to their members, Co-operative Societies are mutual benefit organizations that are owned and controlled by their members for their mutual benefit and welfare. It is essential to understand differences between Nidhi Company and Co-operative Society.

Read Our Article: What Is Nidhi Company? Know It’s Registration Procedure

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