A Nidhi Company is different from a regular finance investment company or a Non-Banking Finance company (NBFC), as it deals only with its shareholders or members, for the main purpose of mutual benefits of its members. A Nidhi Company accept deposits only its members, and lends funds only to them on demand. Again, a Nidhi Company is not entitled to carry out business/activities related with hire purchase financing, leasing finance, chit funds, acquisition of securities issued by any corporate body, etc. or issue any debt instruments (such as reference share, debentures, etc.) in any form.
FAQ
The rules, provisions, and regulations given in the Section 406 of the Companies Act 2013, and in the companies (Nidhi Companies) Rule of 2014, govern and regulate all Nidhi Companies in entire INDIA. Again the activities of Nidhi Companies fall under the ambit of RBI Directives which govern activities of NBFCs and other institutions dealing with financing and investment. RBI offers certain exemptions to the Nidhi Companies based on the fact that these Nidhi Companies deal only with its members, and with no outside people or investors.
A Nidhi company is registered as a Public Limited Company. Hence, the equirements for incorporation of a Nidhi company covered a minimum of three Directors and Seven Shareholders. However, the MOA of a Nidhi company must give proper space to the vital fact that, the main and ultimate objectives of the proposed company are to nurture and promote a habit of thriftiness and savings among its members, and accept deposits from or lend loans only to its members, for the mutual benefits of them.
Once a Nidhi Company is incorporated within a period of one year from the date of commencement of its activities, it must satisfy the following conditions
- It must have at least Two Hundred shareholders/Members.
- It should have a minimum Net Owned Funds (NOF) of Rs. Ten Lakhs or more.
- The unencumbered term deposit must be at least 10% of the outstanding deposit as specified in rule-14”
- The ratio of NOF to the Deposits, should not be greater than 1:20
The following are three main and exclusive advantages offered by a Nidhi Company in India. This is a single office institution governed exclusively by its members, with no external involvement. This is immensely helpful to people with the middle to lower financial status, by virtue of providing loans at reasonable rates, with the minimum documentation and formalities.
Secured investments are guaranteed by such mutual benefit company, by its rigid membership structure.
Yes, because Government of India/Ministry of Corporate Affairs/RBI has framed the laws/rules to ensure the security and safety of deposits and Nidhi Company strictly abides by the rule and regulations framed by the Central Government.
The Company uses the funds in lending to the Shareholder/members only as per Nidhi company rule. Our lending is in the shape of small loans for business and microfinance.
Only shareholders/Members of the Nidhi Company, who has a membership ID, can invest in the scheme. For membership, must be 18-years and above as per submission of standard age proof and must be a citizen of India.
For become a Shareholder/Member you must be an 18-years and above as per standard age proof and submit address/ID proof along with share subscription amount at nearest branch.