Introduction of Nidhi Company
Nidhi Company means a Company engaged in receiving deposits and lending loans to its Members only for their mutual benefits. It is incorporated as a Public Limited Company and is different from National Banking Finance Company governed by the RBI Act and other Companies incorporated under Companies Act, 2013. The purpose behind incorporating a Nidhi Company is to develop a habit of saving and thrift among its Members.
It is not directly regulated by the RBI but is required to follow some of the directives that are issued by the RBI from time to time for acceptance of deposit. It is an ideal type of entity for a specific group of people intended to deposit or lend money.
Legal Window has team of experts providing you the best assistance, timely delivery and guaranteeing the highest customer satisfaction with respect to Company formation process. You may get in touch with our team on 072407-51000 or email email@example.com for Nidhi company registration and Compliance services.
Advantages of Nidhi Company
Documents Required for Incorporation
Process of Incorporation of Nidhi Company
1. Complete the Application Form
You are requested to first fill the simple questionnaire provided by our expert team.
At the second step we will be requiring the documents in accordance with the questionnaire filled by you so that we can arrange them as per the requirement and for processing.
3. Application for DSC
First of all DSC (Digital Signature Certificate consisting of the E-signatures) is required to be prepared. This step can be ignored if prepared already. It will approximately take 1-2 days.
4. Name Availability
The next step is to check the name availability. The name should be unique in nature and should not be similar to name of any other entity registered. It may take at least 1-2 days.
5. E-filing for incorporation of a Company
Once the name is approved, an online application is required to be filed through SPICE+ along with the requisite documents as obtained from the client with ROC. The MOA as well as AOA shall be filed online. This process again takes approximately 2-3 days.
6. Get Certificate of Incorporation
Once the Company gets incorporated we will share all the docs like Incorporation Certificate, MOA, AOA and Digital Signatures.
Post Registration Requirements
Loans & Deposits
Nidhi companies have an advantage over other type of finance vehicles that they can lend loans and accept deposits from general public (members) without the approval of RBI. It is important to know the basics before doing the same
- Can provide loan only to its members
- Certain Monetary Limits have been defined for giving loans
- Can only give secured loans against gold, silver, immovable property, FDs, NSC, other Govt Securities and Insurance Policies
- It can charge interest rate 7.5% above the rate of interest offered on deposits on reducing balance method
- Can accept 20 times deposit of the Net Owned Funds (Example : If NOF is Rs. 10 lakhs, it can accept deposits amounting to Rs. 2 crores
- Deposits can be accepted in the form of FD A/c, RD A/c, Savings A/c
- Can pay interest on FD and RD up to 12.5% and 6% on Savings A/c.
- Fixed Deposits Tenure : 6 months - 60 months
Recurring Deposits Tenure : 12 months - 60 months
Compliances of Nidhi Company of Post Incorporation
Comparison Between Nidhi Company and NBFC
|S. No.||Basis||NBFC||Nidhi Company|
|1.||Act||Governed by Indian Banking Regulation Act, 1934||Governed by Companies Act, 2013|
|2.||Capital required||More Capital is required||Less Capital required then NBFC|
|3.||Compliances||Strict Norms and Regulations||Less Strict Norms and Regulations|
|4.||Restrictions||There are no such restrictions applicable on NBFC like Nidhi Company||Nidhi Company cannot do business of chit funds, hire purchase finance, lease finance, insurance or acquisition of securities issued by the Body Corporate.|
|5.||Opening of Branch||Can open branch at any time||It has to continuously earn profit for a period three years for opening a branch.|
|6.||Dealing||Can deal with general public||Can only deal with its Members|
|Know More||Get Started|
Get your Nidhi company registered at just ₹ 25,000/- only (Inclusive of all fees)
FAQs on Nidhi Company
A Nidhi Company cannot accept deposit exceeding 20 time of its Net Owned Funds as per the last audited Balance Sheet.
One Member of Nidhi Company shall not have a maximum balance of more than Rs. 1 lakh in a savings account and the maximum rate of interest to be paid on any deposits shall not be more than 2% above the rate of interest payable by nationalized banks, on such deposits.
No, a Nidhi Company cannot carry on the business as a microfinance company as the guidelines for both the entities are totally different.
Yes a Nidhi Company can open three branches in the State in which it has registered office after earning profits for continuously three years. The branch can be opened outside the state after taking approval from Regional Director.
Yes a Nidhi Company can declare dividends not exceeding 25% or higher as may be approved by RD subject to fulfilment of conditions.
Net Owned Fund = Paid up share capital + Free Reserves – Accumulated losses, deferred revenue expenditure, and other intangible assets
- Nidhi Company is prohibited to engage in chit funds, insurance, leasing finance or acquisition of securities issued by any Body Corporate.
- Nidhi Company can't issue preference shares, debentures or any other such instrument.
- It can only accept deposits and lend money to its members.
- These type of entities cannot pay any incentive for mobilizing funds accepted as deposits.
No, there is no requirement to take the licence or permission from RBI as RBI has exempted Nidhi Companies from its core provisions
Yes you can close the branches by giving an intimation to Registrar and by publishing advertisement in newspaper.
Yes, Every Nidhi company having deposits outstanding at the close of last working day of the second proceeding month shall invest 10% of the amount in unencumbered deposits with a scheduled commercial bank or post office in its own name.