To establish a NIDHI Company, certain documents need to be prepared and submitted. These include:

• Memorandum of Association (MOA): The MOA should clearly outline the objectives, rules, and regulations of the NIDHI Company. It should specify the minimum number of members required to start the company.
• Articles of Association (AOA): The AOA should detail the internal rules and regulations governing the operations and management of the NIDHI Company.
• Director Identification Number (DIN): All proposed directors of the NIDHI Company must obtain a unique DIN from the Ministry of Corporate Affairs (MCA).
• Digital Signature Certificate (DSC): Digital signatures are required for electronically signing various documents throughout the registration process.
• Address Proof: The NIDHI Company must provide address proof documents such as utility bills or rental agreements for the registered office address.

The process of forming a NIDHI Company involves the following steps:

• Minimum Members: Ensure the presence of at least seven members to form a NIDHI Company. All members must be individuals and Indian citizens.
• Name Approval: Select a unique name for the NIDHI Company and apply for its approval with the Registrar of Companies (ROC). The name should include the term “NIDHI” as a part of the company name.
• Incorporation Documents: Prepare the necessary incorporation documents, including the MOA, AOA, and other prescribed forms, as per the requirements of the Companies Act, 2013.
• Filing with ROC: Submit the incorporation documents to the ROC along with the requisite fees.
• Capital Requirement: Ensure that the NIDHI Company has a minimum paid-up equity share capital of Rs. 5 lakhs within one year of its incorporation.
• Compliance: Comply with post-incorporation requirements, such as holding regular board meetings, maintaining proper accounting records, and adhering to tax and regulatory obligations.

To register a NIDHI Company, the following eligibility criteria must be met:

• The NIDHI Company must have at least seven individual members, all of whom are Indian citizens.
• The company must be formed with the objective of cultivating thrift, savings, and mutual benefit among its members.

• Promotes Thrift and Savings: NIDHI Companies encourage members to develop the habit of thrift and savings, fostering financial discipline and stability.
• Financial Inclusion: NIDHI Companies play a vital role in promoting financial inclusion by providing financial services to members, especially in rural and underserved areas.
• Member-Focused Approach: As a mutual benefit society, NIDHI Companies focus on the needs and interests of their members, providing customized financial products and services that cater to their specific requirements.
• Limited Liability: Members of a NIDHI Company have limited liability, protecting their personal assets and minimizing risk.
• Simple Registration Process: The process of registering a NIDHI Company is relatively straightforward and cost-effective compared to other financial institutions.

• Restricted Operations: NIDHI Companies are restricted in their operations and can only accept deposits and provide loans to their members. They are not allowed to engage in any other financial activities such as offering credit cards or engaging in investment banking.
• Limited Capital Mobilization: NIDHI Companies rely primarily on member deposits for their capital base. They may face challenges in mobilizing sufficient capital to meet the financial needs of their members.
• Regulatory Compliance: NIDHI Companies are subject to regulatory oversight and compliance requirements imposed by the Ministry of Corporate Affairs. They must adhere to specific rules and regulations to ensure the protection of member interests.
• Limited Access to Funding: NIDHI Companies have limited options for raising external funds as they cannot issue shares to the general public or attract external investors. This may restrict their ability to expand operations or offer a wider range of financial products and services.
• Member Dependency: NIDHI Companies depend heavily on their members for growth and sustainability. Success is linked to the active participation and engagement of members, making member engagement and retention crucial for long-term viability.