Nidhi Company
A nidhi company is a type of company in the Indian non-banking finance sector, recognized under section 406 of the Companies Act, 2013. Their core business is borrowing and lending money between their members. They are also known as Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company.
Nidhi Company is a type of Non-Banking Financial Company (NBFC). It is formed to borrow and lend money to its members. It inculcates the habit of saving among its members and works on the principle of mutual benefit. These companies typically operate in the southern part of the country. Nidhi Company isn’t required to receive the license from Reserve Bank of India (RBI), hence it is easy to form. It is registered as a public company and should have “Nidhi Limited” as the last words of its name.
Nidhi Company
Nidhi Company Details
Advantages of Nidhi Company
- Very Easy formation - Nidhi company registration is very simple and the level of complexity as compared to other types of finance companies like NBFC is minimal in Nidhi Company.
- Cost Efficient Registration - The minimum capital requirement for registration of Nidhi Company is Rs 5,00, 000 lakh
- No RBI Regulations – less compliance - Nidhi Company by its nature of activity comes under the category of NBFC but does not require RBI approval.
- More Certainty in Nidhi company - the main objective of Nidhi company is to promote the habit of saving amongst its member which means it is certain and going concern business as the members will not stop savings anytime.
- Less level of Risk - It is the safest route for lending loan and the loans given to members are at very low rates in comparisons with other providers which again bring greater savings amongst members.
- Net owned fund - Net owned fund means the amount of capital invested by owner in its business for raising funds. The net owned fund ratio of Nidhi Company is 1:20, which means you invest one rupee and raise the deposit of twenty rupees.
Key features of Nidhi Company
- Lowest Price - Nidhi Company Registration at just Rs. 16,999/- (lowest price across web)
- Branches for Nidhi - Nidhi Company can open 3 branches after 3 years within the district.
- No RBI Requirement - Since the sole member can also be the directoNidhi Company do not require RBI registration to do loan business in India.
- Loan against security - Nidhi Company can lend only against gold, property, FD, Govt securities
- Interest on loan - Nidhi Company can earn max 20% interest on loan on reducing balance method.
- Members under Nidhi Company - Nidhi Company can deal with its members only & has to make min 200 members.
Procedure of Nidhi Company Registration
- KYC of all the Directors and Shareholders - At least 3 directors and 7 members are needed. Same individuals can be both members and directors. Without DIN numbers, maximum 3 members can be directors at the time of incorporation of the company.
- Digital Signature - DSC (Digital Signature) is a fundamental need for initiating the Nidhi Company Registration Process. All the forms are submitted must be self-attested.
- Approval of Name - The suggested names of Nidhi Company must be unique and should not match the names of already registered companies. The name can be reserved with Reserve Unique Name (RUN) form.
- Documentation - After digital signature and name approval, we will draft all the directors' and shareholders' declarations sheets for their acceptance, articles of association, memorandum of association and subscription sheet.
- Final Incorporation (MoA and AoA) - Once approval of name procedure is completed, the application for Nidhi Company Registration should be submitted through SPICe Form. The application should accompany Memorandum of Association (MoA) and Articles of Association (AoA) of Nidhi Company. Once proper inspection of the application is completed, COI is issued.
- PAN and TAN - PAN and TAN applications will be done with Nidhi Company Registration.
Documents Required for Nidhi Company Formation
- Conveyance/ Lease deed/ Rent Agreement
- NOC from Owner
- Latest Utility Bill of registered Office
Documents Required for Directors / Shareholders
Address Proof for Company
- Conveyance/ Lease deed/ Rent Agreement
- NOC from Owner
- Latest Utility Bill of registered Office
For Directors / Members
- PAN Card
- Identity Proof ( Voter’s ID / Passport / Driving License )
- Address Proof ( Latest Telephone Bill / Electricity Bill/ Bank Account Statement )
- Photograph