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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.

  1. Nidhi Company requires a minimum capital of Rs 5 lakh.
  2. Only members are allowed to lend and borrow money.
  3. It is a form of Public limited company
  4. It is regulated through the Ministry of Corporate Affairs.
  5. 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.

Contact Sujata Associates now to know more about the benefits of Nidhi company registration.

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:

  1. Copy of Subscriber's PAN card.
  2. Passport size photograph of directors
  3. Copy of Aadhaar card/Identity of directors
  4. Copy of rent agreement (If the property is rented one)
  5. Electricity/Mobile bill
  6. Copy of property Papers
  7. No objection certificate of the landlord, if any.


For more details click here…

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