Nidhi Company

Nidhi Companies

The primary object of Nidhi company is to carry on the business of receiving deposits and lending money to member borrowers only against jewels, then mutual benefit, etc., and mortgage of property. Nidhi objects to cultivating the habit of prudent. , generally promoted by public-spirited and such rule are prescribed by CG, men drawn from affluent local persons, lawyers and professionals like auditors, educationists, etc., including retired persons.

The area of Nidhi operation was very local –the areas within municipalities and panchayats. Some Nidhis company account of their financial and administrative strength, the opened branches within the revenue district, and even outsiders. The principle of mutual benefit has been absorbed to collect the savings from members and lend to dealing with members. Nidhis were not awaiting to withdraw themselves in the business of Chit Fund, hire purchase, insurance, or in any other business including investments in shares or debentures. Nidhis company is started do business only with Members and Such all Members are only individuals. some Bodies Corporate or Trusts are never to be admitted as a Members in these companies,

Following are the Benefit of Nidhi Company

A Nidhi mobilizes small savings, largely of the middle-class people, and disburses loans to eligible borrowers. unsettle to their small size and closeness to the customers, disbursement of loans is speedy. This is most useful in case the borrower is in urgent need of funds.

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

Nidhis give offers a higher rate of interest on deposits. This makes it an attractive investment occasion for people, especially senior citizens.

Following are the Disadvantages of Nidhi Company

Don’t like other financial institutions, Nidhi Companies are craped from advertising their depositing schemes. Nidhi Companies are allowed to advertise between their members only.
Nidhi Companies are not running any other business other than lending and borrowing on its name.
A Nidhi Company is not allowed to carry on its any deposit schemes for more than 5 years.

In the Incorporation of Nidhi Company, the name of the proposed company should end with the words “Nidhi Limited”. After incorporation as a Nidhi company, as per Rule 5 of the Nidhi Rules, 2014, every Nidhi company has to ensure the following condition within a period of one year from the date of its incorporation:-

1. Not less than two hundred members;
2. Net Owned Funds must be ten lakh rupees or more;
3. Unencumbered term deposits of not but one-tenth of the outstanding deposits as laid out in rule 14; and
4. The ratio of Net Owned Funds to deposits of less than 1:20.