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A “Nidhi company” is a company that manages “deposits from and loans to” it’s members (shareholders) only, and works for their mutual benefits.
Accordingly, certain exemptions have been provided to a “Nidhi Company”, in respect of annual compliances and tax assessment.
Nidhi Companies in India are formed, administered, and controlled by Section 406 of the new, “Companies Act, 2013”, the Companies (Nidhi Companies) Rules of 2014, and the Chapter XXVI of the Companies Rules, 2014
The objective of incorporating a Nidhi Company is to encourage savings among its members. Nidhi companies are allowed to take a “deposit from and lend to” it’s members only. At the end of the day, the assets added to a Nidhi company come distinctly from its members and are to be utilized uniquely by the investors of the Nidhi Company.
The name “Nidhi” in Nidhi Company signifies “treasure” and it has its roots in the Hindi vocabulary. Nidhi Company is a specific class of NBFC. Though not directly regulated by the RBI, still RBI has powers to issue directives for them related to their deposit acceptance activities. Moreover, because these “Nidhi companies” deal with their members (shareholders) only, they have been exempted from the core provisions of the RBI Act and other directions applicable to NBFCs. Accordingly, a Nidhi Company is a perfect lawful element to take a “deposit from and loan to” a particular gathering of members.
Section 406 of the “Companies Act, 2013” and the Companies (Nidhi Companies) Rules of 2014, provide all the arrangements concerning the joining and administration of a Nidhi Company in India.
The rules and directives for the Nidhi Companies are likewise given by the RBI. These are chiefly identified with financial activities and investments by companies including the NBFCs.
The interest charged on loans under a Nidhi Company is very sensible. The advances are given against security as it were. The deposits under Nidhi do not earn much interest as compared to deposits in the sorted out banking sector.
All lending and borrowing of the Nidhi Companies are done by its members, exclusively. Consequently, such organizations additionally allude to Mutual Benefit Societies.
In the event when you are hoping to begin a business in financing or advances in India, a Nidhi Company is the best choice for it.
Passport Sized photographs of all the directors.
ID proof of all the designated directors and shareholders. (PAN card and Passport are valid).
Address proof of all the directors and members (Ration Card, Aadhaar Card, Passport, Voter ID, and Utility Bill – electricity/water/mobile).
Address Proof of the Company. Make sure that the address proof is not older than 2 months.
Copy of the Property papers (if the property is owned).
NOC (No-Objection-Certificate) from the owner (if the property is rented).
The main objective behind building up a Nidhi Company is to urge its members to save so that they can easily meet their monetary requisites emerging from time to time. By being thrifty they become independent and would meet any future expense. And the advantage of getting a company enlisted as Nidhi doesn’t end here.
Liability is Limited: The liability of Directors and investors of a Nidhi Company is limited. The individual resources of any of the Directors or members are not in danger of being seized by banks, creditors, and government.
Fewer Regulations: Nidhi organizations are administered under the Nidhi Rules, 2014. The Central Government is the directing power, and it only controls it’s exercising and working. Not many Rules are enforced by the RBI on a Nidhi company.
Better Credibility: Nidhi companies offer better credibility instead of some other member-based associations like “Trusts, Cooperative Societies, or NGOs.”
Better Option for Savings: The main purpose of a Nidhi Company’s incorporation is to encourage the habit of saving among the members (shareholders) of the Company. This is how it achieves the other goal of being mutually beneficial. The Nidhi Companies are allowed to lend and borrow money from it’s members (shareholders) only.
Easy Access of Public Funds: The loans from the Nidhi Company comes at a less expensive rate than advances from banks and other NBFCs.
Micro Banking : : Nidhi companies give banking services to the remote and rural public of India, who are still located in far-off lands.
Better Credit Co-operative Society: A Nidhi Company is a nearby substitute for a credit co-employable society. Furthermore, it is increasingly favored by the small financers. When a Nidhi organization has been enlisted, the members can profit from a considerable number of advantages of credit co-operative society.
Simple Processing: Borrowing and lending to known people is substantially less confusing than managing banks, where the method is generic and fixed.
Easy Registration Process: The procedure to enroll a Nidhi Company with LegalRaasta is very easy and transparent. You don’t have to take any permits from RBI. You simply need to incorporate your organization as an open constrained, with the MCA.
Single Regulatory Body: After the Amendment in Companies act 2013, Nidhi Companies are supervised by the Nidhi Company Rules, 2014.
Low Capital Requirement: Ministry of Corporate Affairs (MCA) orders that the base capital requisite is Rs.5 lakhs for a Nidhi company. And, within 1-year, the capital has to be raised to be at least Rs.10 lakhs. The “Fees, DIN, DSC & Other Expenses” are approximately Rs.25-30,000. These include Government fees that, differ from State to State.
Fulfilling the needs of Lower & Middle-income groups: Nidhi Companies assume a significant job in addressing the needs of lower and middle-income groups by giving them money related assistance without complex formalities and documentation.
Easier Eligible : People getting minimum wages and belonging to lower strata are usually unable to take loans from traditional banks because of their high eligibility criteria. For them, a Nidhi Company is a good option to obtain finance because of the fewer conditions.
No External Involvement : Nidhi Companies take assets from their members and further gives credit to it’s members. In this way, no outer variables are influencing the work of these organizations. The financial members themselves direct the tasks of the organization.
Separate Entity : A Nidhi Company is a separate legal entity that can acquire assets and incur debts in it’s own name.
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