Nidhi Company is a company registered under the Companies Act, 2013, which has a sole objective of cultivating the habit of thrift and savings amongst its members. Nidhi companies are allowed to take deposit from its members and lend to its members only. Therefore, the funds contributed for a Nidhi
company are only from its members (shareholders) and used only by the shareholders of the Nidhi Company.

Nidhi company is a class of NBFCs and RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, in recognition of the fact that these Nidhis deal with their shareholder-members only, RBI has exempted the notified Nidhis from the core provisions of the RBI Actand other directions applicable to NBFCs. Therefore, Nidhi Company is an ideal entity to take depositfrom and lend to a specific group of people.

Easy Management

The Board of Management of a Nidhi company can be easily changed by filing simple forms with the
Registrar of Companies. The Board of Management of a Nidhi company controls the activities of the Nidhi
company.

Going Concern

A Nidhi company being a juristic person, can acquire, own, enjoy and alienate, property in its own name.
No member can make any claim upon the property of the Nidhi company as long as it is a going concern.

Uninterrupted Existance

A Nidhi company has 'perpetual succession', that is continued or uninterrupted existence until it is legally
dissolved. A Nidhi company, being a separate legal person, is unaffected by the death or other departure
of any member but continues to be in existence irrespective of the changes in membership

Better Credibility

A Nidhi company enjoys better credibility when compared to Mutual Benefit Organizations. Nidhi
companies are registered and monitored by the Central Government. Mutual Benefits Organization are
on the other hand governed and monitored by State Governments.

1. Application of DSC & DPIN :

First of all, the partners have to apply for Digital signature and DPIN for Nidhi
company. Digital signature is an online signature used of filing and DPIN refer to
Directors PIN number issued by MCA. If the directors already have DSC and DPIN,
then this step can be skipped.

2. Name approval :
You have to provide 3 different name options for Nidhi company to MCA of which
one will be selected. Names provided should ideally be unique and suggestive of
company business.

3. MOA & AOA submission :

Once the name is approved, one needs to draft Memorandum of association and
Articles of Associate. But the object of the Nidhi company must always be a
charitable object. Both MOA and AOA are filed with the MCA with the subscription
statement.

4. Get incorporation certificate :
It typically takes 15- 25 days to form a Nidhi company and get the incorporation
certificate. Incorporation certification is a proof that company has been creation. It
also includes your CIN number.

5. Apply for PAN, TAN and Bank account :
Then you need to apply for PAN and TAN. PAN and TAN are received in 7 working
days. Post this, you can submit the Incorporation certificate, MOA, AOA and PAN
with bank to open your bank account.