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Nidhi Company Registration
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Nidhi Company Registration
A Nidhi company is a type of non-banking financial company (NBFC) that is specifically designed for deposit and lending activities among its members. It is governed by the provisions of the Companies Act, 2013, and the Nidhi Rules, 2014. Unlike other NBFCs, a Nidhi company does not require approval from the Reserve Bank of India and is exempt from some of the provisions of the RBI Act. A Nidhi company is required to comply with the provisions of the Companies Act, 2013 and the Nidhi Rules, 2014, as well as any other applicable laws and regulations.
Objectives of Nidhi Company
The objectives of a Nidhi Company, also known as a Mutual Benefit Company, in India are typically to promote the habit of thrift and savings among its members and to create a source of mutual credit for them. The profits generated from the business operations of the Nidhi Company are meant to be distributed among its members in the form of dividends. The primary aim of a Nidhi Company is to serve the financial needs of its members, promote savings, and provide loans at reasonable rates of interest.
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Documents Required for Nidhi Company Registration
Passport-size photographs
Copy of Members PAN Card
Copy of members' identity proof (Aadhaar Card, Voter Card, Driving Licence, or Passport)
Copy of member's address proof (latest bank statement or any latest utility bill)
Copy of address proof (latest utility bill) for the registered office of the company.
Copy of the NOC or rental agreement permitting the use of the premises for the registered office.
What we offer
Benefits of Nidhi Company Registration
Low cost of borrowing
Nidhi Company offers loans to members at lower interest rates compared to other financial institutions. This makes it an attractive source of credit for members, as they can access funds at a lower cost. The low interest rate is due to the mutual benefit structure of a Nidhi company, which allows it to operate without the need to generate high profits. Instead, the aim of a Nidhi company is to serve the financial needs of its members and promote savings.
Easy access to credit
Nidhi Company provides easy access to credit for its members. As a mutual benefit company, the aim of a Nidhi Company is to serve the financial needs of its members, and providing loans is a key part of this mission. Members can easily apply for loans and access credit without going through the rigorous processes required by other financial institutions, making it a convenient source of funding for those in need.
Promotion of Savings
Promoting savings is one of the primary objectives of a Nidhi company. The aim of a Nidhi Company is to encourage members to regularly set aside a portion of their income for future use. By promoting the habit of thrift and saving, a Nidhi Company can help members build a financial cushion and prepare for unexpected expenses. This, in turn, contributes to financial stability and security for both individuals and the community as a whole.
Dividends
The profits generated from the business operations of a Nidhi company in India are distributed among its members in the form of dividends. This provides a source of additional income for members and aligns with the mutual benefit structure of the company. The goal of a Nidhi Company is not to generate high profits, but rather to serve the financial needs of its members and promote savings. The distribution of dividends among members is one way to accomplish this.
Community development
Another benefit of a Nidhi company in India is that it can play a role in community development. By providing members with access to credit and financial services, a Nidhi Company can support individuals and small businesses in the community, promoting economic growth and stability. This, in turn, contributes to the overall development of the community. As a mutual benefit society, a Nidhi Company can also play an important role in building a sense of community and encouraging members to support each other financially.
Ease of operation
The formation and operation of a Nidhi Company are relatively straightforward compared to other financial institutions, making it an attractive option for small and medium-sized enterprises. The simple structure and streamlined processes of a Nidhi Company make it a convenient option for those seeking to access credit or invest their savings. Additionally, the mutual benefit structure of a Nidhi Company allows it to operate without the need to generate high profits, making it a less complex and less regulated option compared to other financial institutions.
Frequently Ask Question
"Nidhi" is a Sanskrit word that means "treasure". A Nidhi company is a type of financial company regulated by the Ministry of Corporate Affairs. It is a type of non-banking financial company that is registered under the Companies Act, 2013. The primary business of a Nidhi company is to provide loans to its members, who are shareholders of the company. The company mobilises funds from its members by accepting deposits and utilises these funds to provide loans to its members, while adhering to the guidelines set by the Reserve Bank of India.
Nidhi companies are a specific type of NBFC and do not require RBI approval to operate in India.
Microfinance business is not allowed for Nidhi companies. As per the guidelines set by the Ministry of Corporate Affairs, the primary business of a Nidhi company is to accept deposits from its members and to lend those funds to its members only. They cannot engage in microfinance activities or provide loans to non-members.
According to the provisions of the Companies Act of 2013 and Nidhi Rules, a Nidhi company can open up to three branches after three years of continuous profit-making. These three branches can be opened within the district where the registered office of the company is located. Further, to open any branch outside the district, approval from the RD is required.
According to the provisions of the 2013 Companies Act and Nidhi Rules, a Nidhi company is allowed to take a maximum of 20 times its net owned fund. Net owned funds (NOF) is the total of paid-up share capital and free reserves less accumulated and intangible assets as appearing in the last balance sheet.
A minor cannot be admitted as a member of a Nidhi company. However, deposits can be accepted in the name of a minor if they are made by the minor's natural or legal guardian, who must be a member of the same Nidhi company. The minor's natural or legal guardian is responsible for managing the minor's deposit account until the minor reaches the age of majority.
The principle of mutual benefit has been to pool the savings of members and lend only to members, never dealing with non-members.
Nidhi shall not issue preference shares.
Equity shares of the nominal value of not less than ten rupees shall be issued by each Nidhi company.
Seas Insta Legal LLP has a team of well experienced staff. They are experts in the registration of finance companies. They can help you with the registration of the Nidhi Company.