Nidhi Company Requirements (2026): Members, Net Owned Funds, Paid-Up Capital and Deposit Ratios

Last updated 26 September 2026

What are the requirements to form a Nidhi company?

The requirements to form a Nidhi company are 7 members and 3 directors at incorporation, then 200 members and ₹20 lakh Net Owned Funds (NOF) when you apply for Nidhi status, plus minimum paid-up equity capital of ₹10 lakh. These figures are as of September 2026 and come from the Companies Act 2013 and the Nidhi Rules 2014 as amended.

Take Farhan, who runs a savings group of 120 people and wants to make it a Nidhi. He assumes his group qualifies because it already saves together. It does not yet: he is 80 members short of the 200 needed, and he must also show ₹20 lakh in NOF. Knowing this early lets him decide whether to grow the group first, or to consider a different structure.

The table below gives every number in one place. Then we explain each one. For the wider registration picture, see the Nidhi company registration page.

How many members and directors does a Nidhi company need?

A Nidhi company needs at least 7 members and 3 directors to incorporate, because it must be a public company, and it needs at least 200 members to be declared a Nidhi. The Nidhi Rules prescribe no separate incorporation minimum; the 200 figure is the declaration and operating requirement.

These are two different tests, and mixing them up is the commonest mistake. Seven is a Companies Act minimum for a public company (see public limited company registration). Two hundred is a Nidhi Rules figure that must be met by the time you file Form NDH-4, and it must be maintained afterwards.

Members must be individuals. The rules do not allow a body corporate or a trust to become a member, and minors are not admitted as members: a minor's deposit goes through a guardian who is a member. Also, a member cannot transfer more than 50% of the shareholding held when a loan or deposit was taken, while that loan or deposit continues.

What are Net Owned Funds and paid-up capital for a Nidhi?

Net Owned Funds (NOF) must be at least ₹20 lakh, and paid-up equity capital must be at least ₹10 lakh. These are two separate numbers, and neither is a fee: both are money your members put into the company.

Paid-up capital is the share capital members have actually paid. The minimum was raised from ₹5 lakh to ₹10 lakh by the 2022 amendment, so sources that still say ₹5 lakh are out of date.

Net Owned Funds is, broadly, paid-up equity plus free reserves, less accumulated losses and intangible assets. The Nidhi Rules require ₹20 lakh (raised from ₹10 lakh in 2022), and proceeds of preference share capital do not count towards NOF. Your CA computes it from the books, so ask for the workings before you file NDH-4.

If your paid-up capital is ₹10 lakh, you are still ₹10 lakh short of the NOF requirement unless you also hold free reserves. Plan capital with both numbers in mind. The cost guide explains why this capital is not a fee.

What is the 1:20 ratio and the 10% unencumbered deposit rule?

The 1:20 ratio means a Nidhi's deposits must not exceed 20 times its NOF, measured on the last audited financials. The 10% rule means at least 10% of deposits outstanding must be held in unencumbered term deposits with a scheduled commercial bank or post office.

Work it through with numbers. If your NOF is ₹20 lakh, the ceiling on deposits is ₹4 crore (20 times ₹20 lakh). If deposits outstanding are ₹1 crore, at least ₹10 lakh must sit in unencumbered term deposits. The 10% is measured on deposits outstanding at close of business on the last working day of the second preceding month.

Unencumbered means the deposit is free of any charge or pledge. A temporary withdrawal is possible only with the Regional Director's approval through Form NDH-2. This money cannot be lent out, so it reduces your lendable pool. Build this into your projections before promising members loan sizes.

The rules also cap loan sizes, deposit terms and interest spreads, and loans are made to members only and against security. We keep those details general here because your CA should confirm the current figures for your deposit size.

Who can be a director or promoter of a Nidhi company?

Every promoter and director of a Nidhi must pass the fit-and-proper test, and a declaration of it is filed with Form NDH-4. As of September 2026, the disqualifiers include:

• a pending criminal complaint filed by a person authorised by the Central Government, or a pending charge sheet for economic offences;
• an in-force restraint or debarment order under company, securities or financial-market laws;
• a conviction for an offence involving moral turpitude;
• being an undischarged insolvent or a person of unsound mind;
• being a wilful defaulter or a fugitive economic offender;
• being a director in 5 or more Nidhi companies, or a promoter of 3 or more.

Check each founder against this list before you start, not on day 119. If one founder fails, you cannot fix it by paperwork. You need to replace that person. For the full application sequence, see the NDH-4 declaration process.

What can and cannot a Nidhi company do?

A Nidhi's sole permitted object is cultivating the habit of thrift and savings among its members, receiving deposits from members and lending to members only. Everything else is restricted.

Under the Nidhi Rules a Nidhi cannot, among other things:

• run a chit fund, hire-purchase, leasing or insurance business, or acquire securities;
• issue preference shares, debentures or any debt instrument;
• open a current account with its members;
• accept deposits from or lend to non-members or body corporates;
• advertise to solicit deposits, or pay brokerage or incentives for mobilising them;
• raise loans from banks or other sources in order to lend to members.

If your plan involves lending to the public, financing vehicles or taking outside investors, a Nidhi is the wrong tool. We compare the options in the guide on Nidhi company vs NBFC vs cooperative society.

Are these the same rules as before 19 April 2022?

No. Companies incorporated on or after 19 April 2022 follow Rule 3B, which requires NDH-4 within 120 days of incorporation with 200 members and ₹20 lakh NOF. The older regime, which gave a year to reach 200 members, applies only to Nidhis incorporated before that date, and the old NOF figure of ₹10 lakh has since risen to ₹20 lakh.

This matters because many popular blogs blend the two. If a page tells you to wait a year to reach 200 members for a new company, do not rely on it. The Nidhi Rules have also seen amendments in 2023 (forms) and 2024 (a rule that a company cannot use "Nidhi Limited" in its name unless it is declared a Nidhi); we found no 2025 or 2026 amendment to the rules themselves, though a Corporate Laws (Amendment) Bill 2026 is pending.

Because rules can change, treat this page as a general guide as of September 2026 and confirm current requirements with your CA.

What if you cannot meet these requirements?

If you cannot reach 200 members or ₹20 lakh NOF, a Nidhi is likely not the right structure yet. Consider whether a private limited company or a Section 8 company fits your goal better, and compare with a cooperative society.

If a Nidhi does fit, Shunya can take the incorporation stage. The Nidhi page describes SPICe+ with a Nidhi-compliant MOA and AOA, filed by a CA on the MCA portal; a practising Chartered Accountant reviews every filing. The professional fee is ₹1,999; the DSC issuer's charge, government fees, stamp duty and other third-party or statutory costs are billed separately, and your CA walks you through them on your callback. Ask on that callback if you need support beyond incorporation, such as NDH-4.

Start with a free callback (name and phone) or pay the professional fee online. You can also WhatsApp or call +91 80809 18797.

This article is for general information only. For your specific situation, consult a practicing CA.