Nidhi Company
A Nidhi Company is a type of Non-Banking Financial Company (NBFC) registered under Section 406 of the Companies Act, 2013. It is formed to promote the habit of savings and thrift among its members. Nidhi Companies primarily deal with deposits and loans among their members, ensuring financial security within a closed group. Unlike traditional NBFCs, they do not require RBI approval, making the registration process simpler.
Benefits of Nidhi Company Registration in India
Registering a company as a Nidhi in India offers a range of advantages that extend beyond the primary objective of fostering savings among members. Here are key points emphasizing what are Nidhi company benefits:
- Easy Formation: Nidhi Companies boast a straightforward and hassle-free formation process with minimal requirements, making it accessible for those looking to establish such entities.
- Non-Compliance with RBI: Nidhi Companies are not bound by the Reserve Bank of India (RBI) guidelines, allowing them to set their own operational rules and regulations.
- Lower Risk: Transactions involving lending, borrowing, or depositing are carried out by members of the Nidhi Company, reducing financial risks and ensuring a sense of security within the community.
- Economic Registration: The registration process for a Nidhi Company is cost-effective when compared to other Non-Banking Financial Company (NBFC) registration procedures, which facilitates easier access to business loans and financing options.
- Savings Promotion: Nidhi Companies play a pivotal role in promoting a culture of saving among the Indian population, thereby contributing to financial prudence.
- Net-Owned Funding System: Nidhi Companies typically adopt a cost-effective net-owned funding system, which can enhance their business growth prospects by efficiently utilizing their own resources and funds.
Documents Required for Nidhi Company Registration in India
To register a Nidhi Company in India, you need to provide the following essential documents:
- Directors Identification Number (DIN)
- PAN Number (Permanent Account Number)
- Bank Statement latest (Not older than 2 month)
- Photographs of the proposed directors and members
- Email and Mobile Number
- Identification documents like Aadhar card
- Proof of the registered business place, such as a rent agreement and NOC
- Ownership proof of the business place like electricity bill, Municipal /Property Tax Receipts/ Sale Deed.
- Memorandum of Association (MOA)
- Articles of Association (AOA)
Documents Required for Nidhi Company Registration in India, To establish and operate as a Nidhi Company in India, certain prerequisites must be met and categorized into requirements before and after Nidhi registration process.
Requirements before Registration:
- Minimum Shareholders or Members: A minimum of 7 members is required to initiate the registration process.
- Minimum Directors: You must have a minimum of 3 directors to form the company.
- Minimum Capital: A minimum capital of Rs. 10 lakhs is essential to kickstart your Nidhi Company.
- Director Identification Number (DIN): Directors must obtain a Director Identification Number (DIN).
- Number of Directors: At least three directors are necessary to establish the company.
- No Preference Shares: Issuing preference shares is not permitted.
- Focus on Savings: The Company's primary objective should be to promote the habit of saving by receiving deposits from and lending to its members exclusively for their mutual benefit.
Requirements after Registration:
- Membership Quota: By the end of the first year, your Nidhi Company must have at least 200 members or shareholders.
- Net Owned Funds (NOF): Your Company’s NOF should be atleast Rs. 20 lakhs.
- NOF to Deposit Ratio: The NOF to deposit ratio should be 1:20 or less.
- Unencumbered Deposits: Unencumbered deposits must be over 10% of outstanding deposits.
A Nidhi Company is a type of Non-Banking Financial Company (NBFC) registered under Section 406 of the Companies Act, 2013. It is formed to promote the habit of savings and thrift among its members. Nidhi Companies primarily deal with deposits and loans among their members, ensuring financial security within a closed group. Unlike traditional NBFCs, they do not require RBI approval, making the registration process simpler.
