Nidhi Company

Nidhi Company belongs to the Non-banking money corporation's structure. It is established to borrow and lend money to the members. Nidhi firms are registered in India to establish the habit of thrift and savings among its members. For Incorporating a Nidhi Company, no license is needed from the banking sector of India. Hence, the origination of the Nidhi Company is straightforward.

Nidhi Corporations are registered as Public corporations. This firm is typically operated in the southern part of India.

Nidhi companies play an essential role in supporting the middle and lower-middle classes' people by providing financial services with minimal paperwork and documentation. It is difficult for people on low annual incomes to meet the minimum requirements for credit and other financial services that prevent them from fulfilling their long-term dreams.

Nidhi Company gives immense relief to people by permitting them to deposit their savings and get pleasure from the returns at mounted durations. The Nidhi Company is the orbit of India's banking company because the functioning of Nidhi firm is comparable to NBFCs. Nidhi Company is registered under section 406 of the Companies Act 201. Nidhi Companies are considered a safe and easy means of investment.

Some of the features of Nidhi Company include

  • Nidhi Companies builds the habit of frugality and savings amongst its members.
  • The registration structure of Nidhi firm is much simpler than that of NBFCs also requires less documentation.
  • Every Nidhi Company is compulsorily required to have Nidhi Limited in their name, and the main business is to accept and lend deposits among its members only.

Registration

Eligibility Criteria for Nidhi Company Registration

  • Minimum Number of Shareholders
  • Minimum Number of Directors
  • Capital Requirements
  • No Issuance of Preference Shares
  • Minimal Nominal Value
  • Minimum Amount of Equity Shares

Advantages

Aside from this, their square measure many alternative benefits of Nidhi Company include:

  • Easy Formation

    The registration method of a Nidhi Company is comparatively straightforward compared to alternative NBFCs. To form a Nidhi company, seven persons are needed, and three are appointed as a Director. Moreover, the registration method needs less documentation and work, making it straightforward to register a Nidhi Company.

  • Minimum risk of no payable loans

    Since Nidhi Companies receive a deposit and provide loans to none apart from its members, it reduces the threat of non-compensation of loans compared to different corporations of a similar nature.

  • RBI Regulations

    as Nidhi Company comes below the class of NBFC, it doesn't require the approval of RBI to begin.

  • Less Capital Requirement

    The minimum capital required for registration is one of Nidhi's main advantages. According to the 2014 Nidhi Rules, the minimum capital required to register a Nidhi business is only Rs. 500,000.

  • No outside interference

    No third-party interference is allowed. It is limited only to the members. No outsider can deposit money.

Disadvantages

Few disadvantages of Nidhi Company

Despite numerous merits, these companies there are few disadvantages as follows:

  • Nidhi Companies is mandatory only to accept deposits and lend the money only to its members or shareholders. No outsider can deposit money which limits the number of funds raised by the Company.
  • Nidhi Companies are prohibited from running any other business other than lending and borrowing on its name.

Registration Process

Documents Required For A Nidhi Company Registration Include

  • To Be Submitted By All Directors
  • Self-attested copy of PAN Card
  • Driver's License copy / Voter ID/ Passport
  • Bank Statement Copy/ Telephone Bill/Mobile Bill
  • Electricity Bill
  • Passport-size photograph
  • Specimen Signature Certificate

How to incorporate as a Nidhi Company ?

  • The first step is to acquire the Digital Signature Certificate of the individual. After the signature is done, the applicant must request the Director Identification Number.
  • The next step is to make an application to MCA for name application approval. The names suggested must be unique and should not go against any property rights.
  • Once the application is ready, the applicant must file prescribed documents to the ROC, and it should be filed through INC form 32, and MOA and AOA should be submitted.
  • An incorporation certificate is only provided after reviewing the Incorporation Certificate. The certificate is provided in 15 days. Apply for PAN and TAN.
  • The last step while incorporating is to open a Bank account on behalf of the business for any transaction.
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