Nidhi Company

As per Section 406 of Companies Act 2013, Nidhi means a company which has been incorporated as a Nidhi with an object of cultivating the habit of thrift and saving amongst its members, receiving deposits from and lending to, its members only, for their mutual benefit, and which complies with the rules made by the Central Government for regulation of such class of companies.

According to Rule 4 of Nidhi Rules, 2014, a Nidhi Company shall be a public company and must have a minimum paid up equity share capital of Ten lakh rupees

Restrictions
No Nidhi shall-
(a) carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
(b) issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
(c) open any current account with its members;
(d) acquire or purchase securities of any other company or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management.
(e) carry on any business other than the business of borrowing or lending in its own name:
Provided that Nidhis which have adhered to all the provisions of these rules may provide locker facilities on rent to its members subject to the rental income from such facilities not exceeding twenty per cent. of the gross income of the Nidhi at any point of time during a financial year.
(f) accept deposits from or lend to any person, other than its members;
(g) pledge any of the assets lodged by its members as security;
(h) take deposits from or lend money to any body corporate;
(i) enter into any partnership arrangement in its borrowing or lending activities;
(j) issue or cause to be issued any advertisement in any form for soliciting deposit:
Provided that private circulation of the details of fixed deposit schemes among the members of the Nidhi carrying the words “for private circulation to members only” shall not be considered to be an advertisement for soliciting deposits.
(k) pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans. 

Conditions to Be Fulfilled

• Minimum 200 members
• Net owned funds- INR 20 LAKHS OR MORE
• Unencumbered term deposits of minimum 10% of the outstanding deposits
• Ratio of Net Owned Funds to deposits of not more than 1:20.