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Nidhi Company (F)

Nidhi Companies

The primary object of Nidhis is to carry on the business of accepting deposits and lending money to memberborrowers only against jewels, etc., and mortgage of property. For over a century Nidhis, with the objective of cultivating the habit of thrift, generally promoted by public spirited men drawn from affluent local persons, lawyers and professionals like auditors, educationists, etc., including retired persons.

The area of operation was local – within municipalities and panchayats. Some Nidhis on account of their financial and administrative strength opened branches within the respective revenue district and even outside. The principle of mutual benefit has been incorporated to pool the savings from members and lend only to members and never have dealing with non-members. Nidhis were not expected to engage themselves in the business of Chit Fund, hire purchase, insurance or in any other business including investments in shares or debentures. As stated these Nidhis do their business only with Members. Such Members are only individuals. Bodies Corporate or Trusts are never to be admitted as Members in these companies

A Nidhi mobilises small savings, mostly of the middle class and disburses loans to eligible borrowers. Owing to their small size and closeness to the customers, disbursement of loans is speedy. This is especially useful in case the borrower is in urgent needs of funds.

The repayment is guaranteed, as the loans are secured and due to peer pressure, borrowers ensure that loan is repaid on due dates.

Nidhis offer a higher rate of interest on deposits. This makes it an attractive investment opportunity for people, especially the senior citizens.

  1. Unlike other financial institutions, Nidhi Companies are restricted from advertising their depositing schemes. Nidhi Companies are allowed to advertise among its members only.
  2. Nidhi Companies are restricted from running any other business other than lending and borrowing on its name.
  3. A Nidhi Company is not allowed to carry on its deposit schemes any more than a period of 5 years.

The name of the company should end with the words “Nidhi Limited”. After incorporation as a Nidhi, according to Rule 5 of the Nidhi Rules, 2014, every Nidhi shall within a period of one year from the date of its incorporation, ensure that it has –

  1. Not less than two hundred members;
  2. Net Owned Funds of ten lakh rupees or more;
  3. Unencumbered term deposits of not less than ten per cent of the outstanding deposits as specified in rule 14; and
  4. Ratio of Net Owned Funds to deposits of not more than 1:20.

All about Nidhi companies.

Nidhi Companies

As per section 406 of the Companies Act, 2013, “Nidhi” or “Mutual Benefit Society” means a company, which the Central Government may by notification in the Official Gazette, declare to be a Nidhi or Mutual Benefit Society, as the case may be. Nidhi” means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and saving amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with the rules made by the central Government for regulation of such class of companies.

Disadvantages of the Nidhi Companies 

No Nidhi shall –

  • carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
  • issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
  • open any current account with its members;
  • acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi.
  • carry on any business other than the business of borrowing or lending in its own name. Nidhis which have adhered to all the provisions of these rules may provide locker facilities on rent to its members subject to the rental income from such facilities not exceeding twenty per cent of the gross income of the Nidhi at any point of time during a financial year.
  • accept deposits from or lend to any person, other than its members;
  • pledge any of the assets lodged by its members as security;
  • take deposits from or lend money to any body corporate;
  • enter into any partnership arrangement in its borrowing or lending activities.

Basic

INR 1,500/-

One Time Fee

  • GST Registration
  • MSME Registration
  • Bank A/c.

Service Provide Within 7 Days

Standard

INR 11,999/-

One Time Fee

  • GST Registration
  • Shop & Establishment Registration
  • MSME Registration
  • Trade Mark Registration
  • Logo Design
  • Opening Bank A/c.

Service Provide Within 15 Days

Premium

INR 11,999/-

Yearly Fee

  • Yearly GST Compliances
  • Income Tax Return

Services Provided Before the Due Date

Frequently Asked Questions

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