Nidhi company
A Nidhi company is a specific kind of business recognized by Section 406 of the 2013 Companies Act in the non-banking financing industry of India. Their main activity is to lend and borrow money among their members. Permanent Funds, Benefit Funds, Quasi Banks, Mutual Benefit Funds, and Mutual Benefit Companies are other names for them.
Nidhi is a company that was formed to establish the habit of bargain hunting and saving among its members and receiving deposits and lending to its members solely for their mutual advantage.
Nidhi Company in India existed before the establishment of the Companies Act of 2013. The "Principle of Mutuality" is the foundation of Nidhi. These companies are much more well-known in South India, with Tamil Nadu accounting for 80% of Nidhi companies.
Registration of Nidhi Company-
Nidhi company registration is simple and less complicated than other types of finance companies, such as NBFC, which require an RBI license to begin operations. A Nidhi company in India can be established with a starting capital of Rs.5 lakh and at least seven employees (minimum 7 members). Nidhi company registration as well necessitates the appointment of three directors at the early stage. To apply for a Nidhi company in India, every promoter or director must provide a copy of their PAN card, ID proof, and address proof.
Amendments of Companies Rule
The MCA(Ministry of Corporate Affairs), through its notification dated 18 February 2020, has further amended the Companies (Incorporation) Rules, 2014, by replacing the former form INC-32 (SPICe) with the web application SPICe+, among other changes.
- A Request for Name Registration
- Complete Part B of the SPICe+, MOA, AOA, and AGILe Form.
- Convert the SPICe+ Form to PDF
- Submit the Form to the MCA(Ministry of Corporate Affairs).
Some Benefits of Nidhi Company:
In this blog, we will look at the advantages of establishing a Nidhi company in India-
Simple formation
It only requires seven people, three of whom will be appointed as directors. There is less paperwork to complete, and the registration process is simplified. It only takes about 10 to 15 days to register. When compared to other kinds of finance companies, such as NBFC, Nidhi company registration is indeed very simple.
Low-Cost Registration
The cost of registering a Nidhi Company is reasonable. The minimum capital for registering a Nidhi Company is INR 5,00,000 lakh, which you can invest within two months of documenting your Nidhi Company.
No RBI Regulations
Nidhi Company, by definition, falls into the NBFC category but doesn't require RBI approval. These businesses adhere to the Nidhi Rules, 2014, which govern the company's activities and operations. The RBI has excluded Nidhi Companies from restrictive compliances, so you don't need to be in a hurry if you proceed with a Nidhi Company in India.
More Certainty with Nidhi Company
Everyone in India enjoys saving money, from a six-year-old child to a sixty-year-old man. And the main goal of Nidhi company is to enhance the saving among its members, which means that it is a sure and anticipating future business because the representatives will not stop saving at any time.
Lower Risk
A Nidhi Company can only accept deposits and make loans towards its members in compliance with the Nidhi Rules, 2014, implying that the risk of loan non-payment is lower than in other finance businesses. It is the most secure route for lending loans, and the money loaned to associates is at very low rates when compared to other providers, resulting in greater savings for members.
Fund with no net assets
The sum of money invested by the owner in the business to raise funds is referred to as the net owned fund. Nidhi Company's net owned fund ratio is 1:20, which also implies you invest one rupee and receive a deposit of twenty rupees.
Structure of Nidhi Company
The Nidhi company structure in India is directed by Section 406 of the Companies Act 2013. The full name of NIDHI is the National Initiative for Developing and Harnessing Innovations.
It is a government-mandated program dedicated to serving the needs of small and medium-sized businesses. The Ministry of Corporate Affairs governs the essential features of a Nidhi company.
The members' contributions are the Nidhi Company's primary source of funding.
Nidhi Company is an example of an NBFC. Though the RBI does not directly regulate them, the RBI does have the authority to issue directives regarding their fund acceptance activities.
Though the RBI does not directly regulate them, the RBI does have the authority to issue directives regarding their fund acceptance activities. Furthermore, because these Nidhi's only deal with their shareholder-members, they have been excluded from the resources and potential of the RBI Act and other NBFC-related directives. As a result, Nidhi Company in India is a perfectly legal entity for accepting deposits and lending to a particular group of people.
Loan Structures and Restrictions
Once a member has begun investing money, he can obtain loans and advances from the Nidhi company. MCA rules and guidelines govern the number of loans granted by the Nidhi company in India. Their names are:
- If you deposit less than Rs. 2 crores, you can get a loan of up to Rs. 2 lakh.
- If you deposit between Rs. 2 crores and Rs. 20 crores, the loan amount can be increased to Rs. 7.50 lakhs.
- You can borrow up to Rs. 12 lakh if your deposit is greater than Rs. 20 crores but less than Rs. 50 crores.
- If your deposit exceeds Rs. 50 crores, you can get a loan of Rs. 15 lakhs.
The loan will have a min. Term of 6 months and max. term of 60 months. You will be able to check the status and authenticity of your loan. However, you must maintain regular deposits to obtain loans under the Nidhi scheme as needed. The Nidhi company structure in India has a set borrowing and lending system. You cannot make large investments all at once. It is regarded as a secure concept for avoiding fraud and mismanagement.
Conclusion-
Obtaining a Nidhi company registration online is unquestionably a great move. However, because the competition is fierce, you may require the assistance of a legal firm to complete your company's Nidhi registration. You need a dependable firm to ensure your company's Nidhi registration, such as Lawgical India, which aids you with Nidhi Company registration and has a team of experts to advise you. Contact Us today to speed up your Nidhi Registration.
