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WHAT IS NIDHI COMPANY?

A Nidhi Company is a type of company in the Indian non-banking financial sector recognized under Section 406 of the Companies Act, 2013, whose core business is borrowing and lending between its members. Nidhi Company is also known as Permanent Fund, Benefit Funds, Quasi-Bank, Mutual Benefit Funds, and Mutual Benefit Company. They are a type of non-banking financial company (NBFC) in India. They were incorporated primarily to encourage savings among its members as well as the establishment of reserve funds. The company receives deposits from its members and lends money only to its members to benefit each other.

The Nidhi Rules, 2014, govern Nidhi companies. They are incorporated in the nature of a public limited company and hence have to comply with two norms, one for public limited companies under the Companies Act, 2013, and another for Nidhi Rules, 2014. Every Nidhi company has to ensure that it has at least 200 members within one year of its incorporation.

They are regulated by the Ministry of Corporate Affairs, which also has the power to issue instructions to them in relation to the acceptance of deposits. In view of the fact that these companies deal only with their shareholders.

Its basic concept is the “Principle of Mutuality”. It is more prevalent in South India, and 80% of Nidhi businesses are in Tamil Nadu.

Process of Nidhi Company Registration:

Now we know that the Nidhi company does not require RBI approval, it makes the registration process simple and straightforward for customers. 

The Nidhi company registration process involves the following steps:-

  • The proposed directors of the company must apply for a digital signature (DSC). The DSC is issued by the certification agencies and the DPIN is issued by the Ministry of Corporate Affairs (MCA).

  • In the next step, you have to apply for the company name via the service RUN. The applicant can submit 2 name options to the MCA even before the actual Nidhi company registration.

  • After approving the name, the e-Memorandum of Association (MoA) and e-Articles of Association (AoA) will be prepared and submitted to the MCA via SPICe Forms. Full details of the proposed directors and shareholders are also provided in the SPICe Form, along with supporting documents as attachments.

  • The Nidhi Company Registration will be completed within a month and you will receive the Registration Certificate along with the Company Identity Number. The Certificate of Incorporation is the proof of registration of the Nidhi Company with the MCA. Along with the company registration, the Director Identification Number (DIN) is also issued to the directors if they did not already have one.

When compared to other finance business kinds like NBFC, which need an RBI license to operate, Nidhi company formation is simpler and less complicated. A nidhi company can be launched with Rs. 10 lakh in initial capital and needs at least seven employees to get going (minimum 7 members). Three directors are initially required for Nidhi company registration. To apply for a nidhi corporation in India, each promoter or director must provide a copy of their PAN card as well as identification and address documentation.

NIDHI COMPANY REGISTRATION FEE

Our business is dedicated to giving consumers high-caliber service. We have been providing Nidhi Company Registration services for a long time. We have grown into a fantastic group of specialists and professionals. Our consulting team is here to assist you at any time. Here are some specifics about our services:-

BASIC

For 3 Months

₹ 4,999
  • Nidhi Registration
  • Nidhi Consulatancy
  • MOA/AOI/AADHAAR CARD KYC
  • .
  • .
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PREMIUM

In 15 Days

₹ 39,999
  • Nidhi Registration
  • Nidhi Consultancy
  • MOA/AOI/AADHAAR CARD KYC
  • Basic Software
  • Nidhi Compliances
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ADVANCED

IN JUST 2 MONTHS

₹ 24,999
  • Nidhi Registration
  • Nidhi Consultancy
  • MOA/AOI/AADHAAR CARD KYC
  • Basic Software
  • .
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Benefits of Nidhi Company Registration

The main reason Nidhi Company was founded was to encourage its members to save money so they could occasionally satisfy their financial obligations. They develop critical thinking skills, which help them become independent and be able to cover any future expenses. The advantages of registering a business as a Nidhi don’t stop there, either.

There are many advantages to setting up a Nidhi firm. Among the main advantages are:

  • No outside involvement in the management of the company;
  • Simple to raise capital, lend money to, or borrow from group members;
  • simple to control;
  • low financial commitment;
  • a lowering of the compliance rate;
  • affordable registration;
  • According to the Companies Act of 2013, certain privileges and exemptions are offered;
  • RBI’s minimal engagement;
  • a safe investment with a low interest rate;
  • very little risk;
  • possesses the standing of a distinct legal entity.
  • better choice for saving;
  • The sole regulatory body is Nidhi Company Rules;
  • An improved alternative to the Credit Cooperative Society;
  • has the standing of a distinct legal entity;
  • supplying the lower- and middle-income classes’ financial needs;
  • basic processing;
  • easy access to government funding;
  • limited liability;

The requirements for registering a Nidhi company

One kind of non-banking financial company is the Nidhi Company (NBFC). It was established to lend and borrow money from its members. It promotes saving among its members and operates under the tenet of mutual benefit. These businesses primarily operate in the southern region of the nation. Since the Reserve Bank of India (RBI) does not require the Nidhi Company to obtain a licence, it is simple to establish. Its name should end with “Nidhi Limited” since it is registered as a public company. The prerequisites that must be fulfilled in order to register or run a Nidhi Company are listed below.

Requirement before Registration

  • Minimum number of shareholders or members – 7
  • Minimum number of Directors -3
  • The minimum capital requirement is of Rs. 10 lakhs
  • DIN for Directors
  • A Nidhi firm that must be established in accordance with this Act must be a public corporation.
  • No Preference Shares shall be issued.
  • The objective of the company shall be to cultivate the habit of saving by “receiving deposits” from and “lending to” it’s members only for their mutual benefit.
nidhi registration

Requirement after Registration

  • By the end of the 1st year, the number of members or shareholders of the Nidhi Company must be 200 at least.
  • NOF should be more than Rs. 10 lakhs.
  • The ratio for NOF to Deposit should be more than 1:20.
  • Unencumbered deposits should exceed 10 % of outstanding deposits.

Documents Required for Nidhi Company Registration Online

The process for registering a nidhi corporation is simple, but assistance from an expert is advised in order to submit challenging forms on time. Understanding government portals and the terminologies used inside may appear challenging. The following documents must be submitted in order to register.

PAN & Photo

PAN & photo are required for each & every director & shareholder in India.

Address Proof

Anyone of the following: Bank statement, Mobile bill, Electricity bill, Landline bill

ID Proof

Anyone of the following: Aadhar card, voter ID, Driving license & passport.

Registered Office

Electricity bill/rent agreement and copy of No objection certificate

The following process for the registration of Nidhi Company

Although the Nidhi Company Registration procedure is straightforward, it must be carried out by a professional. In addition, the government fully altered the process to encourage ease of doing business. However, the government actually complicates the procedure a little. Finco Solution, on the other hand, has experience with more than 200 Nidhi Company Registrations and oversees hundreds of Nidhi firms throughout India. Be familiar with all six Nidhi company registration stages.

Incorporation Certificate

The above documents will be examined by the Company, which will then get the certificate of incorporation. The company's incorporation procedure is attested to by this certificate of incorporation. Within 16 to 20 business days, the registrar will typically issue this.

Applying for PAN and TAN

The Nidhi Company should submit an application for a PAN and TAN after receiving its certificate of establishment. The relevant Income Tax Department is where the TAN can be obtained.

Opening Bank Account

This completes the incorporation process for the business. In order to conduct any transactions on behalf of the company, a bank account must be opened.

Obtain DSC and DIN

The candidate must first submit an application for a digital signature certificate (DSC). Digital signatures may be made available through the DSC. The applicant must apply for the Director Identification Number after receiving the DSC.

Drafting of MOA and AOA

Following the aforementioned process, the applicant must submit the required paperwork to the Registrar of Companies. Form-INC 32 must be used to file these documents. The MOA and AOA must also be provided with this. The applicant must specify the primary goals of creating this business while submitting documentation.

Apply for a Name Approval

The applicant must submit an application for name approval to the MCA as the following step. The applicant must submit three distinct names for the Nidhi entity during this phase. The names offered must be original and must not violate any Indian law dealing to intellectual property rights.

Nidhi Company Compliances after Incorporation

The main purpose of a Nidhi Company, a form of Non-Banking Financial Company (NBFC), is to lend and borrow money among its members. This Mutual Benefit Company must submit a small amount of compliance paperwork each year; this process is renowned as Nidhi Company Compliances. The Nidhi Rules 2014 and the Companies Act 2013 outline the legal requirements that apply to Nidhi Company.

Form NDH-1

According to the Form, the members list must be submitted on a certain form within 90 days after the end of each fiscal year.

Form NDH-2

If you are unable to reach the 200-member goal and the company's requirements are not met during the first budget,.

Form NDH-3

Half-yearly returns must also be filed on Form NDH-3 in addition to the one previously mentioned, the NDH-1 Form.

Annual Return and the ROC

Annual returns must be filed using MGT-7 in the MCA. MGT-7.

Profit and Loss Statement and the Company’s Balance Sheet

The financial statements and other pertinent documentation must be submitted annually in Form AOC-4.

Income Tax Returns (ITR)

It must submit yearly income tax returns (ITR) for the applicable financial year on or before September 30th.

General restrictions in a Nidhi Company

No NIDHI entity is allowed to operate in the fields of chit funds, leasing finance, hire purchase, or investing in corporate securities etc. The explanation is “MUTUALITY.” Trust-based NIDHI companies exclusively distribute funds among their members.The following are the restrictions that apply to Nidhi Companies’ activities in India:

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FAQ

A Nidhi Company is a Company which carries on the business of accepting deposits and lending the same on demand. Nidhi Company is similar to NBFC but the only basic difference between the two is that Nidhi Companies accept deposits only from its members. The main aim of these companies is to work for the mutual benefit of its members. These companies are not entitled to carry on the business of Hire Purchase Financing, Insurance, Chit Funds and Acquisition of securities or Issue of any Debt Instruments.

A minimum of three directors and seven shareholders are needed for incorporating a Nidhi Company.

No, a minor is not allowed to become director of a Nidhi Company. Only a person who is a minimum of 18 years old can become the Director of a Nidhi Company.

No, there is no upper limit prescribed for the maximum number of members. However, it is mandatory for a Nidhi Company must have a minimum of two hundred members by the end of the 1st financial year.

No, all the financial transactions have to be made only between the shareholders of the company.

A Nidhi Company can open up to 3 branches after three years of continuous profit running of the business. Further, these three branches can be opened within the district only. Further, to open any branch outside the district, you will require the Regional Director (RD) permission. Also, a Nidhi Company cannot open a branch outside the state.

Yes, the Deposits with such companies are safe and secure because the Ministry of Corporate Affairs and Reserve Bank of India has framed rules and regulations to ensure the safety and security of Deposits. And the Nidhi Company compulsorily abide by the rules of Central Government.

Any person who is above 18 years of age as per the standard age proof can become a member of the Nidhi Companies. The person desirous of becoming a member should have valid ID Proof and Address Proof.

Nidhi can provide loans to its members only after the members have given/ provided some securities like gold, silver jewelry or any type of financial securities against the loan.

Yes, it is necessary to use the word “Nidhi Limited” in the name of the company. However, the term “Mutual Benefit” can also be used.

The regulations passed by the Ministry of Corporate Affairs and the provision of Nidhi Rules, 2014 act as the regulating authority for Nidhi Company.

A Certificate of Incorporation has lifetime validity, or till the time the company’s name is not struck off by the ROC (Registrar of Companies).

No, Nidhi Company is not qualified to issue unsecured loans. However, it can issue Secured Loans to its shareholders or members.

No, a person cannot borrow again from the Nidhi Company if he has earlier defaulted in a loan.

No, a Nidhi Company is not allowed to operate outside the state in which it is registered.

No, the profits earned from a Nidhi Company cannot be invested in any other business.

A minimum of 6 months and a maximum of 60 months period is prescribed for fixed deposits in a Nidhi Company.

A Nidhi Company can accept deposits only from its Registered Members.

A minimum of 12 months and a maximum of 60 months period is prescribed for recurring deposits in a Nidhi Company.

No, Nidhi Companies are exempted from the core NBFC provisions of the Reserve Bank of India.

A Nidhi Company is not regulated and governed by the provisions of RBI. Moreover, Nidhi Company Registration requires a much smaller amount of capital than Rs 2 Crore paid-up capital requirement for NBFCs.

No, a Nidhi Company is not allowed to issue Preference shares and Debt Securities.

No, a Nidhi Company cannot purchase securities and shares from any other organization.

No, a Nidhi Company is not allowed to open a Current Bank Account with its shareholders or members.

No, a Nidhi Company is not allowed to carry out any activity other than Lending and Borrowing.

A director of Nidhi Company can hold their office for 10 consecutive years. However, he is eligible for re-appointment only after the expiry of 2 years, starting from the cessation of his term.

A Nidhi Company is allowed to open only three branches within a district. However, to open more than three branches, the said Company is must seek prior approval of the RD (Regional Director) for every additional branch.

A Director is firstly required to be a member of the said Company, and then, he must comply with the requirements prescribed under Section 152(4) of the Companies Act, 2013.

A Nidhi company must be incorporated under the provisions of the Companies Act, 2013, and shall acquire the status of a Public Limited Company.

No, such rules have been prescribed banning a salaried person from becoming a director of a Nidhi Company. However, the employment agreement of the said person may place some restrictions on him or herein doing so.

A Nidhi company cannot be converted into NBFC.

No, Nidhi Company cannot give a vehicle loan

A Nidhi Company is a company that carries on the business of accepting deposits and lending the same on demand. Nidhi Company is similar to NBFC, but the only basic difference is that Nidhi Companies accept deposits only from its members.

Nidhi can deal only in secured loans. Thus it can give loans against the securities mentioned in the law.

The term NOF is the acronym form for the Net Owned Funds. Further, NOF or the Net Owned Fund = Aggregate Paid up share capital + Free Reserves – Accumulated losses (Deferred Revenue Expenditure), and Other Intangible Assets appearing in the Last Audited Balance Sheet.

 

The minimum capital requirement is 10 lacs

To form a Nidhi business, there should be at least 7 members with valid documents for registration. You can go to the OneClick website for registration.

Yes, Nidhi company is a type of NBFC ( NON-BANKING FINANCIAL COMPANY ).

Yes, Nidhi companies are safe and secure. MCA and RBI have framed rules and procedures for Nidhi.

No, Nidhi can only accept deposits from its members.

Yes, Nidhi can give gold loans.

No, Nidhi cannot invest in MUTUAL FUNDS. It is against the rules governed by the MCA         (Ministry of Corporate Affairs).

No, it can’t borrow from banks.

No.

No.

No.

No.

It was established to lend and borrow money at the lowest rate of interest to its members.

It does not earn money. It accepts deposits from its members.

No, it can’t give unsecured loans.

No.

Nidhi companies are companies set up to promote savings among people and create a fund for their members. NBFCs are set up to provide financial assistance to businesses and weaker sections of society.

The owners of the Nidhi are its members but in a cooperative society, the owners of banks are its members. Nidhi is limited to its members only but the cooperative society operations can be extended to the general public also.

Nidhi provides loans to its members but the microfinance company provides loans to small-scale enterprises.

Nidhi company is a type of NBFC and works only for its members but MICRO FINANCE  company comes under section 8 of the company act and it works for all small-scale businesses.

The main difference between a Nidhi Company and a Chit Fund is that a Nidhi Company is an NBFC that can only lend or accept deposits, whereas the latter, i.e. the Chit Fund, is also a committee like a Nidhi Company but only accepts installments over a period of time paid by its members and neither lends nor accepts the amount as a whole.

10 Lacs.

There is no full form of Nidhi. Nidhi is a word in the Hindi language that means treasure

 A minimum of three directors are needed to establish a Nidhi Company and the maximum number cannot exceed fifteen.

Following are the mandatory documents required for the closing of Nidhi Company; Indemnity Bond notarized by Directors (STK 3); Latest Statement of Accounts; Statement of Accounts furnishing details assets & liabilities of Company Audited by Chartered Accountant.

For the audit of the Nidhi Company, the regulator will propose the names of three auditors, one of whom will be selected by the Nidhi. The selected auditor will perform his duties continuously for three years unless the situation requires a change.

Nidhi Company has to file NDH-4 within 4 months (120 days) from the date of incorporation. Nidhi must have at least 200 members and net equity (NOF) must be at least 20 lakh to file NDH-4.

It is registered as a public company and should have “Nidhi Limited” as the last word of its  name.

No, it is a public company.

Yes, you can do registration online for Nidhi.

No

Tenure of minimum 6 months up to 60 months

Nidhi accepts deposits from its members.

A Nidhi shall not accept deposits exceeding twenty times its Net Owned Funds (NOF) as per its last audited financial statements.

Nidhi is a type of NBFC (Non-Banking Financial Company). Since Nidhi Companies are neither beneficial nor easily tenable, they cannot be converted into NBFCs.

Anyone can form and register a Nidhi company by submitting all the required documents to the registered authority under the guidelines of MCA (Ministry of Corporate Affairs).

Each organisation has a different cost associated with registering a Nidhi corporation. By examining their pricing criteria, you may make a decision.

It can be maximum 20%.

18%

Maximum 20%

It accepts deposits from its members.

It can go upto 20%. Formula for calculating is 7.5% + Highest rate of interest offered by Nidhi Company on Deposit.

It depends upon the deposits as :-

  • Deposit less than 2 Crores – Two Lakhs Rupees
  • A Deposit of 2 crores less than 20 Crores – Seven Lakh fifty thousand
  • Deposit more than 20 Crores but less than 50 Crores – Twelve Lakhs Rupees
  • The total amount of deposit is more than 50 Crores – Fifteen Lakhs Rupees

With the use of cutting-edge technology, Onickexperts offers a comprehensive solution to landing and Fintech businesses. We have been in this industry for the last 12 years. We always have consultation staff on hand to help you and guide you through the registration procedure. Onickexperts is a wonderful team with more than 60 members, including CS, CA, lawyers, and IT specialists.

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