Nidhi Company: Overview
A Nidhi Company is an Indian non-banking financial company (NBFC) that is authorized under Section 406 of the Companies Act of 2013 and is controlled by the Nidhi Rules, 2014. As a public limited business, its primary goal is to encourage members to save money and practice frugal living while also lending to them when necessary.
A Nidhi Company must have a minimum of seven members and a net owned fund of at least 10 lakhs in order to be established. In contrast to other NBFCs, Nidhi Companies are confined in their operations to lending and borrowing exclusively among its individual members. They are not allowed to take public deposits or conduct any financial transactions. Nidhi Companies must abide by certain rules set out by the Indian Ministry of Corporate Affairs (MCA), despite being exempt from RBI registration.
Benefits of Nidhi Company
- Cost-effective Borrowing:
Individuals can borrow money from Nidhi companies at a cheaper interest rate than from banks. As different members may need money at different periods, this offers a big benefit in tough financial circumstances.
- Promotes Savings:
Nidhi Companies encourage thrift and savings habits among their members by accepting deposits from them. This can be particularly beneficial for individuals who may not have access to traditional banking services.
- Regulated Operations:
Nidhi Companies are subject to regulatory oversight by the Ministry of Corporate Affairs (MCA) and must comply with strict regulations, ensuring transparency and financial stability.
- Other benefits:
Nidhi Companies may also offer other benefits to their members, such as life insurance, health insurance, and investment opportunities.
Checklist of a Nidhi Company Registration
- A minimum of 7 shareholders (members).
- A minimum of 3 Directors
- Minimum paid-up capital of ₹5 lakh
- Net Owned Funds (NOF) must reach Rs. 10 lakhs within a year of Nidhi registration.
- The following conditions must be met:
- At least 10% of the total amount of the Company's existing deposits should be unencumbered term deposits.
- The proposed NOF to deposit ratio is one to twenty. This comprises free reserves and equity share capital. Intangibles and cumulative losses are not included.
- a Nidhi company must increase its members to at least 200. The ratio of net owned funds to the deposits must not exceed 1:20. Net owned fund of the Nidhi Company must be Rs. 10 lakh or more. Deposits should not be less than 10% of the outstanding deposits as per Rule 14 of the Nidhi Company Rules, 2014.
Things e-Nidhi can't do as on NBFC
E-Nidhi is a digital platform that allows Nidhi companies to accept deposits and make loans to their members online. It is regulated by the Reserve Bank of India (RBI).
e-Nidhi cannot do the following as ab NBFC:
- Chit fund activities
- Rental-to-own financing
- Buying or protecting securities from any business entity engaged in advance- or loan-related activities as an NBFC.
- Loanable capital
- Any local body may issue marketable securities, such as stocks, shares, bonds, and debentures.
Documents Required for Nidhi Registration
The following documents has to be submitted from all the directors:
- Pan Card (Self Attested Copy)
- Aadhaar Card/ Voter Id /Driving License/ Passport (Self Attested Copy)
- Bank Statement/Mobile Bill/ telephone bill/ Electricity Bill (Self Attested Copy)
- Passport Size Photograph
- Specimen Signature Certificate
Nidhi Company Registration Fees in India
In India, it is easy to register a Nidhi company. We can help because we are a reputable company registrar.After completing the required paperwork, pay the reasonable e-Nidhi Company Registration fees online.When you register, you will get a Certificate of Incorporation as confirmation that your business has been registered.In according to state regulations, there are also Nidhi registration fees and yearly maintenance payments. To learn more about the costs, connect with our experts right now.
Important fact of Nidhi Company
- Nidhi companies can only accept deposits from their members.
- Nidhi companies can only lend money to their members.
- Nidhi companies are not allowed to invest in other companies.
- Nidhi companies are not allowed to engage in any other business activity other than Nidhi business.
- Nidhi companies cannot issue preference shares or debentures.
- Nidhi companies can only open savings accounts.
- Nidhi companies are not allowed to advertise or promote their business.
- Nidhi companies cannot offer brokerage or incentives to members.
- Similar to NBFCs, Nidhi firms are regulated by the RBI.
- The Nidhi Rules of 2014 allow Nidhi firms to charge its members for the use of locker facilities.
- 20% of the total revenue for the financial year shouldn't exceed from locker rental income.
Nidhi Company in India vs RBI Recruitment
- Nature and Purpose:
- Nidhi Company: A Nidhi Company in India is a type of non-banking financial institution (NBFC) primarily established for the mutual benefit of its members. It encourages savings and provides financial assistance, particularly in rural and semi-urban areas. Nidhi companies primarily deal with accepting deposits and providing loans among their members.
- RBI Recuitment:RBI, or the Reserve Bank of India, is India's central banking institution. RBI conducts recruitment processes to hire professionals and staff for various roles within the central bank. These roles can include officers, clerks, economists, financial analysts, and more. RBI plays a crucial role in formulating and implementing monetary policies in India.
- Legal and Regulatory Framework:
- Nidhi Company: Nidhi companies are registered under the Companies Act, 2013, and are regulated by the Ministry of Corporate Affairs (MCA). They must also adhere to the Nidhi Rules, 2014.
- RBI Recuitment: RBI operates under the Reserve Bank of India Act, 1934, and is regulated by the Reserve Bank of India. RBI conducts recruitment processes in accordance with its own guidelines and procedures.
- Function and Operations:
- Nidhi Company: The primary function of a Nidhi Company is to accept deposits and provide loans to its members. It promotes thrift and financial discipline among its members and operates as a mutual benefit society.
- RBI Recuitment: RBI is responsible for formulating and implementing monetary policies in India. It regulates banks and financial institutions, manages the country's foreign exchange reserves, and oversees the payment and settlement systems. RBI conducts recruitment to hire staff and professionals who support these functions.
- Membership and Ownership:
- Nidhi Company: Membership in a Nidhi Company is typically limited to individuals who share a common bond, such as residing in the same locality or working in the same organization. Members are also owners of the company and have a say in its management.
- RBI Recuitment:RBI recruits professionals and staff from various backgrounds, including economics, finance, and banking. Employees of RBI serve in various capacities, but they are not owners of the central bank.
Nidhi Company in India vs RBI Recruitment
FAQS
Once the company is registered, it must fulfill a number of responsibilities. These include things like filing taxes, generating yearly reports, maintaining accurate accounting records, and complying to both employment and safety requirements.
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