Nidhi Company

Nidhi Company is a type of Company in India which is classified as a NBFC (Non-Banking Financial Company). Nidhi Company also known as Mutual Benefit Society.  The main business of such a company is to facilitate lending money between the core members of the company.

In India Nidhi Companies created the habit of savings amongst its members. Nidhi companies are allowed to borrow from its members and lend to its members only.

Nidhi Company incorporates in India as a Limited Company, under Section 406 of the Companies Act, 2013. So, Minimum of 3 directors and 7 members are required to incorporate a Nidhi Company. The name of all the Nidhi Companies must contain Nidhi Ltd. A Nidhi company to be incorporated under Companies Act, 2013 shall be a Public Company. As compared to the registration processes of other NBFCs, registration process of Nidhi Company is an easy one. In respect of taxation and annual compliances, Nidhi companies enjoy the benefit of specific exemptions.

The minimum capital required for incorporation of Nidhi Company is 5lakhs.

The incorporation of Nidhi Company is governed by the MCA (Ministry of Corporate Affairs) and regulated by the Companies Act, 2013 and the Companies Incorporation Rules, 2014.

The activity of Nidhi Company does fall under the purview of RBI (Reserve Bank of India), as it is similar to a NBFC. However, as Nidhi Companies only deal with its shareholder-members money, RBI has exempted Nidhi Companies from the core provisions of the RBI and other regulations applicable to a NBFC.

CS Club India helps you to register your Company across India at a very reasonable price. You can register your Nidhi Company with us in few easy steps. We will provide you facilities at the time of Incorporation. Such as:

• Name Reservation (RUN Application)
• PAN & TAN
• ESI, PF Registration
• Draft of your Company’s constitution (MOA & AOA)
• Bank Account (PNB by default)
• Certificate of Incorporation
• Share Certificates
• GST Registration Certificate      

The benefits or advantages of registering a NIDHI company are enlisted as:

• Company as a Separate Legal Entity
• Easy formation of NBFC without any complexity involved.
• Lower rate of interest
• Varies relaxations given by RBI
• Numerous Taxation Benefits
• Easy to get investment/ funding.
• Higher Certainty and fewer Complications
• Limited Liability
• Legal Security
• Capacity to Sue and Be Sued
• Encourage the saving habit to  lower & Middle class
• Better Compliance and management

Requirement after Incorporation:

 Every Nidhi shall, within a period of one year from Incorporation, must comply the following points:

• A Nidhi Company needs to have 200 members by the end of Ist Year.
• Net owned funds shall be Rs.10,00,000/- or more

(*‘Net owned funds’ means the aggregate of paid up equity share capital and free reserved as reduced by the accumulated and intangible assets appearing in the last audited balance sheet).

• Ratio of net owned funds to deposit shall be not more than 1:20.
• Unencumbered term deposits shall not be less than 10% of the outstanding deposits.
• A Nidhi Company is not entitled to admit a minor, trust, or a body corporate as a member.

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 30 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.