Easy to Incorporate Nidhi Company. Nidhi Company Benefits, Criteria, Procedure for Incorporated a Nidhi Company.
Nidhi Company
Nidhi Company is a company that belongs to the non-banking
financial sector. The core business of Nidhi Company is to borrowing and
lending money between their members. Nidhi Company is incorporated with the
object of growing the habit of thrift and reserve funds amongst its members. In
this blog, we will discuss the meaning of Nidhi Company, its registration,
advantages, and other vital aspects.
What is Nidhi Company all about?
Nidhi Company is a non-banking financial business structure.
Nidhi Company performs the functions of lending and borrowing of money within
its members. Nidhi Company works through its members only. Nidhi Company is
also called as a mutual benefit company. Nidhi Company promotes the art of
saving and utilization of funds within its member community. Nidhi Company does
not require a license of Reserve Bank of India. Companies doing Nidhi Business
are also known as Nidhi, permanent fund, benefit funds, Mutual Benefit Funds,
and Mutual Benefit Company. Nidhi Company is recognized under section 406 of
the Companies Act,
2013.
Structure of a Nidhi Company
Under this head, we will discuss the structure of a Nidhi
Company. The details about the structure of Nidhi Company is listed below.
- Nidhi Company requires a minimum capital of Rs 5 lakh.
- Only members are allowed to lend and borrow money.
- It is a form of Public limited company
- It is regulated through the Ministry of Corporate Affairs.
- It is governed under the Nidhi rules that were.
Benefits of Nidhi Company Registration
Nidhi Companies in India is registered with the objective of
cultivating the habit of Thrift and saving amongst its members with Mutual
Benefit thereof. By structure, all these companies take the form of a public
company registered under the Companies Act.
The activities of Nidhi Company is receiving deposits from and lending
to its members for their mutual benefit and activities of these companies are
limited to their members only. The core compliance planning of the RBI does not
apply to them. They are not even required to get any license from the RBI to
carry out their operations.
Here is a list of the advantages of the Nidhi Companies in India:
1. Limited RBI
Regulations – Owing to the non-dealing of the funds of any person except
the members, the regulations imposed by the RBI on the Nidhi Companies is
limited. All these companies follow the Nidhi Rules, 2014 issued by the center
with respect to the working and activities of the Nidhi Companies.
2. Limited Capital
Requirement – Initially, the minimum capital requirement was Rs 5 lakhs INR
for Nidhi’s decided by the Ministry of Corporate Affairs. It’s only after the
Nidhi Rules, 2014 that commissioned that every Nidhi company should ensure Net
Owned Funds of ten lakh rupees or more. Within 1 year of its registration.
3. Ease of formation
– Unlike the other NBFC’s, the Nidhi Companies do not have to get a license
from the RBI. All they have to do is incorporate themselves as a public company
with the MCA, collect the required amount of money as per the Nidhi rules, 2014
and they are all set to go. The process of Nidhi company registration is same
as to register as a Public Company.
4. Lower rate of
credit – The loans given to the members here are at much lower rate of
interest than the market rate. This helps you bring much more savings to the
members.
5. Helps in
channelizing the funds – The goal of these companies is to promote the
habit of saving and thrifts amongst the lower and the middle section of the
society. These small sections of the population contributes to the funds of and
avail the credit from the Nidhi Companies.
6. No outsider
interference – The Nidhi companies are formed by, managed by, and provide
benefits to their members only. The outsider is not allowed to intervene in the
working of the Nidhi’s, neither allowed to deposit money or avail credit from
these companies.
Procedure for Nidhi Company Registration
To register a Nidhi company certain steps and procedures are
required to be fulfilled. Necessary steps for Nidhi company registration given
below:
Application of Digital Signature Certificate and Designated
partner identification number - To register a Nidhi Company all the partners
have to apply for designated partner identification number and Digital
Signature Certificate. If all the directors already have their designated
partner identification number and Digital Signature Certificate, then they can
skip this step.
Name approval - Person and company who needs to register for
a Nidhi Company has to submit three option for the name of Nidhi Company to the
Ministry of Corporate Affairs and out of three, one will be selected. The names
provided should be completely unique.
Submission of Memorandum of Understanding and Articles of
Association - After the name approval, one has to submit Memorandum of
Understanding and Articles of Association. Both Memorandum of Understanding and
Articles of Association need to be filed with the Ministry of Corporate
Affairs.
Incorporation Certificate - Once registration application is
filed, then Person and company will receive an Application reference The
Incorporation certificate is received within 15-20 days. It is proof that the
company has been incorporated.
Documents required for Nidhi Company Registration
List of the documents required for Nidhi Company
registration is given below:
- Copy of Subscriber's PAN card.
- Passport size photograph of directors
- Copy of Aadhaar card/Identity of directors
- Copy of rent agreement (If the property is rented one)
- Electricity/Mobile bill
- Copy of property Papers
- No objection certificate of the landlord, if any.
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