Planning And Setting Up Of Nidhi Company
WHAT IS NIDHI COMPANY?
Nidhi Company is a company registered under the Companies Act, 2013, which has a sole objective of cultivating the habit of thrift and savings amongst its members. This company is recognized under Section 406 of the Companies Act, 2013. Nidhi companies are allowed to take deposit from its members and lend to its members only. Therefore, the funds contributed for a Nidhi company are only from its members (shareholders) and used only by the shareholders of the Nidhi Company.
Does Nidhi Company require Reserve Bank of India (RBI) approval to register in India?
No, Nidhi Company does not require any RBI approval for its registration in India. Nidhi Company is one of the categories of NBFC which has been specifically exempted by the RBI from its core provisions including registration requirement etc.
Nidhi companies are exempted from the core provisions because Nidhi Companies are governed by the Nidhi rules, 2014. These rules are very stringent in nature. One of the important conditions of Nidhi Company is that it can deal only with its members; it can take deposits only from its members and can advance loans to its members.
FEATURES OF NIDHI COMPANY
A Nidhi must be –
- A company,
- Incorporated as a Nidhi,
- With the object of cultivating the habit of thrift and saving amongst its members,
- Receiving deposit from and lending to its members only,
- For their mutual benefit,
- Complies with such rules.
Advantages of Nidhi Company Registration
| S.No | Advantages | Description |
|---|---|---|
| 1 | No External Involvement in Management | Outsiders are not allowed to intervene in the working of Nidhi Company for availing credit or deposit money because these companies are managed by their members only. |
| 2 | Easy Formation | No need to obtain license from RBI like other NBFCs. |
| 3 | Helpful for Lower and Middle Classes | Nidhi company charges a lower rate of interest from their members. |
| 4 | Minimum Documentation and Formalities | Loans and savings are facilitated by the minimum documentation and formalities. |
We are here to assist you to obtain a Nidhi Company license
Suggested Link: How to Register an NBFC?
Registration Process Of Nidhi Company
| S.No | Steps | Description |
|---|---|---|
| 1 | Digital Signature Certificate | Propose Directors of Nidhi Company should have a digital signature and digital signature will use to file the registration, ROC compliance forms and Tax returns. |
| 2 | Director Identification Number (DIN) | DIN is mandatory to form a company, when a Digital Signature is approved and you will get an approval email from ROC that you are now eligible to be a director of a company. |
| 3 | Name Approval | File a Name Approval form to ROC on your behalf in form INC. 1. It takes 2 to 3 working days to get approval from the Registrar of Companies. |
| 4 | Final Incorporation Form | After Name approval from ROC, we will find a final incorporation form with all supporting documents like registering address proof, Declaration from Directors. A Company can be incorporated online by filling the Simplified Proforma for Incorporating Company Electronically (SPICE) form in Form INC-32 (using Digital Signature Certificate of the Director)along with (eMoA) in Form INC-33 and (eAoA) in Form INC-34. |
MANDATORY REQUIREMENT OF NIDHI COMPANY REGISTRATION
- Minimum 7 shareholders
- Minimum 3 Directors
- Minimum Capital of Rs. 5 lacs
- DIN for all Directors
- Members are only Individual
- Minimum number of 200 members
- Net Owned fund must be of Rs. 10 lakhs and above
- Minimum Capital of Rs. 5 lacs
- Unencumbered deposits of not less than 10% of the outstanding deposits
- Net own fund vs deposits should not be more than 1:20
TOP NIDHI COMPANIES IN INDIA
- Maben Nidhi Limited
- Muthoottu Nidhi (Kerala) Limited
- Mini Muthoottu Nidhi Kerala Limited
- Kalayil Nancy Nidhi Limited
TOP NIDHI COMPANIES IN INDIA
There are some restrictions on Nidhi Companies under Nidhi Rules, 2014. According to Rule ‘6’ of Nidhi Rules, 2014, a Nidhi Company shall not:
- Carry on the Business of
- Chit Fund,
- Hire Purchase Finance,
- Leasing Finance
- 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
- Debentures or
- Control the composition of the Board of Directors of any other company in any manner whatsoever or
- Carry on any business other than the business of borrowing or lending in its own name.
- Accept deposits from or lend to any person, other than its members;
- Must not pledge any of the assets that have been lodged by its members as security;
- Take Deposits from or lend money to anybody corporate;
- Enter into any Partnership Arrangement in its borrowing or lending activities,
- Issue or cause to be issued any advertisement in any form for soliciting deposit,
- Pay any brokerage or incentive for mobilizing deposits from members or for deployment of funds or the granting loans.
COMPLIANCES FOR NIDHI COMPANY
| S.No | Form No | Description |
|---|---|---|
| 1 | NDH-1 | Annual Compliances of Return Within 90 days of the close of First Financial Year after its incorporation. This form shall be duly certified by Company Secretary in Practice or Chartered Accountant in Practice or Cost Accountant in Practice. |
| 2 | NDH-2 | Extension to Regional Director if unable to comply within 90 days Within 30 days from the close of First Financial year. |
| 3 | NDH-3 | Half Yearly Compliances Within 30 days from the close of Half financial year duly certified by Company Secretary in Practice or Chartered Accountant in Practice or Cost Accountant in Practice |
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