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Nidhi company
Nidhi company is like a member’s bank. It is authorized to borrow funds from its members and lend funds to its members. Members can deposit money in nidhi company. If you are willing to own a Nidhi organization, it is mandatory that you get your company registered. Therefore by registering a Nidhi company, a Nidhi is authorized to borrow from its members and lend to its members. In India, Nidhi companies are formed to practice the habit of savings among its member.
Documents required
- 4 Unique names
- Business Description
- Pan card of directors
- Aadhar card of Directors
- Business Address proof (Electricity Bill + Rent agreement + NOC)
- Proof of Address for directors (Electricity bill / bank statement / Prepaid mobile bill)
- Proof of Identity for directors (Driving licence / Voter ID / Passport)
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Market Price
₹24000
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Conditions for establishing a Nidhi company:
Regulations to be followed before registering a Nidhi compan
- A maximum of 7 shareholders are required
- A minimum of 3 directors should be there
- Rs 5 lakh is the minimum amount of capital that is required
- There must be no preference shares
- Director identification number or DIN is mandatory
- The company must work with the goal of practicing savings by borrowing and lending to its members for mutual benefits.
Criteria to be fulfilled after registering a Nidhi Company
- There must be a minimum of 200 members in the company within a year of registering the company.
- The NOF of the Nidhi company should be at least 10 lakh rupees.
- Uninfluenced deposits should be more than 10% of the outstanding deposits.
- The ratio of deposit and NOF should be more than that of 1:20.
Restrictions on Nidhi Companies
- Business as chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by anybody corporate
- Issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever
- Open any current account with its members
- Acquire another company by purchase of securities or control the composition of the Board of Directors UNLESS Special resolution and Regional Director approval is obtained
- May provide locker facilities on rent to its members‐rental income from such facilities not exceeding 20% of the gross income of the Nidhi at any point of time during a financial year
- Carry on any business other than the business of borrowing or lending in its own name
Post incorporation compliances
Every Nidhi shall, within a period of one year shall ensure that it has:‐
- Not less than two hundred members.
- Net Owned Funds of Ten lakh rupees or more.
- Ratio of Net Owned Funds to deposits ‐ not more than 1:20
- Encumbered term deposits of not less than 10% of O/s. Deposits.
FAQs
Can a Nidhi Company accept deposits from the public?
No, Nidhi Companies can only accept deposits from their members. Acceptance of deposits from the public is not allowed.
What are the penalties for non-compliance by a Nidhi Company?
Non-compliance with the Nidhi Rules and regulations may result in penalties, fines, or even the striking off of the company. It’s crucial for Nidhi Companies to adhere to regulatory requirements to maintain their legal status.
Can a Nidhi Company provide loans to non-members?
No, Nidhi Companies can only provide loans to their members. Lending to non-members is not permitted.
Is there a requirement for Nidhi Companies to get RBI approval?
No, Nidhi Companies are not required to obtain approval from the Reserve Bank of India (RBI). They are regulated by the Ministry of Corporate Affairs (MCA).
Can Nidhi Companies operate in multiple states?
Yes, Nidhi Companies can operate in multiple states, but they need to have at least one branch within a year of incorporation.
How does a Nidhi Company differ from a traditional bank?
Nidhi Companies are distinct from traditional banks as they focus on cultivating a habit of savings and thrift among their members. They are restricted to working with their members and do not offer a wide range of banking services.
Can Nidhi Companies issue debentures?
No, Nidhi Companies are not allowed to issue debentures. They can only accept deposits and provide loans to their members.