Contact No
+91-9465331815
+91-9465331815
Contact Email
cayogeshmehra@gmail.com
cayogeshmehra@gmail.com
Nidhi Companies in India are created for cultivating the habit of thrift and savings amongst its members. Nidhi companies are allowed to borrow from its members and lend to its members. Therefore, the funds contributed to a Nidhi company are only from its members (shareholders). Hence, Nidhi companies are mainly used to cultivate a habit of savings amongst a group of people.
It is a company classified as an NBFC (a Non-banking financing company) and registered under Section 406 of Companies Act, 2013. The main business of such a company is to facilitate lending money between the core members of the company. This way members (or shareholders) are encouraged to save money and invest them within the company. These deposits are then used by the company for its members (or shareholders), to provide loans or advances, and to acquire government-issued stocks/bonds/debentures/securities. It is regulated by the Ministry of Corporate Affairs, while the RBI monitors all its financial dealings.
In India, Private Limited company registration cannot be done without proper identity and address proof. These documents will be needed for all the directors and the shareholders of the company to be incorporated. Listed below are the documents that are accepted by MCA for the online company registration process acceptable.
The following are some of the restrictions a Nidhi Company is subject to under Nidhi Rules, 2014. As per Rule 6 of Nidhi Rules, 2014, a Nidhi Company shall NOT:
1. Carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
2. Issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
3. Open any current account with its members;
4. Acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi;
5. carry on any business other than the business of borrowing or lending in its own name: Provided that Nidhis which have adhered to all the provisions of these rules may provide locker facilities on rent to its members subject to the rental income from such facilities not exceeding twenty per cent of the gross income of the Nidhi at any point of time during a financial year.
6. Accept deposits from or lend to any person, other than its members;
7. Pledge any of the assets lodged by its members as security;
8. Take deposits from or lend money to any body corporate;
9. Enter into any partnership arrangement in its borrowing or lending activities;
10. Issue or cause to be issued any advertisement in any form for soliciting deposit: Provided that private circulation of the details of fixed deposit Schemes among the members of the Nidhi carrying the words “for private circulation to members only” shall not be considered to be an advertisement for soliciting deposits.
11. Pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans.
1. Self-attested copy of PAN Card
2. Self-attested copy of Driver’s License/ Voter ID/ Aadhaar Card/Passport
3. Self-attested copy of Bank Statement/ Telephone Bill/Mobile Bill/ Electricity Bill
4. Passport-size Photograph
5. Specimen Signature Certificate
To start a Nidhi Company in India, the first step is to incorporate a Limited Company, under the Companies Act, 2013. Hence, a minimum of three Directors and seven shareholders will be required to start the Limited Company incorporation process. During incorporation of the Nidhi company, care must be taken to ensure that the object of the Limited Company mentioned in the Memorandum of Association is that of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.
Post incorporation of the Limited Company, within a period of one year from the commencement, the Nidhi Company must meet all of the following criteria:
1. Not have less than two hundred members (shareholders);
2. Have Net Owned Funds (NOF) of ten lakh rupees or more;
3. Have unencumbered term deposits of not less than ten per cent of the outstanding deposits; and
4. Have a ratio of Net Owned Funds to deposits of not more than 1:20.
"Net Owned Funds" means the aggregate of paid up equity share capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet.
In the case at the end one year from commencement the Nidhi Company is not able to meet the above requirement, the Company may within thirty days from the close of the first financial year, apply to the Regional Director in Form NDH-2 for extension of time.
If even after the second financial year the Nidhi Company is not able to meet the requirements for a Nidhi Company, then the Nidhi Company shall not accept any further deposits from the commencement of the second financial year till it complies with the provisions for operating as a Nidhi Company and be liable for penal consequences.
A minimum of three branches can be opened in a particular district. In case you want to expand outside the district or want to open more than three branches, the Registrar of Companies need to intimated 30 days prior to their opening.
The conditions laid down by the Act says that a Nidhi Company should acquire a minimum of 200 members within its first year of incorporation. However, in case the company is not able to meet the required numbers, it can apply for an extension with the necessary government authorities.
No, members are only allowed to deposit, borrow, or lend funds.
Any person can deposit, lend or borrow money through the provisions provided by the Companies Act, 2013. Hence, they can all become members of a Nidhi Company. provided they are not a corporation or a company.
A Nidhi Company can accept deposits not exceeding 20 times of its net owned assets, as per the last audited statements.
