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Willing to reserve funds amongst members? Then Nidhi Company is best for you.
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Nidhi company registration is the process of incorporating a type of NBFC called Nidhi.This NBFC is also known as Mutual Benefit Finance Company. Starting a Nidhi company is one of the best options for people who want to commence a finance business with low capital investment.
A Nidhi company, also known as Nidhi Bank aims to cultivate the habit of savings and thrift amongst its members.Its main area of operation is borrowing and lending of funds.As per the rules,it can only make transactions with its registered members and within the permitted district of work.
The Nidhi Company is registered with the Ministry of Corporate Affairs and regulated by the Companies Act 2013. The registration process is comparatively easy in comparison to registration processes of other NBFCs.
In this NBFC, there are no eligibility criteria for a minimum qualification of Directors. Additionally, this category of NBFC does not require the approval of Reserve Bank of India for incorporation.It is mandatory that every Nidhi company has to end their name with “Nidhi Ltd.”
Nidhi Company is outside the preview of Reserve Bank of India. It does not require a license from RBI to operate a loan business in India.
It has a separate legal entity as from its promoters and shareholders. Nidhi Company can acquire property on its name and also incur debts.
The liability of directors and managers is limited as per The Companies Act 2013.
It has a perpetual existence; it is not affected by death or departure of any one or all of its shareholders.
Executing changes in Nidhi Company is more comfortable in comparison to other NBFCs
The Ministry of Corporate affairs regulates Nidhi Companies. Hence, it is considered more credible as compared to other similar institutions controlled by state governments.
♦ Photograph of all the Directors♦ PAN Card of all the Directors♦ ID Proof of all the Directors (Driving License/Passport/Voter ID/Aadhar Card)♦ Electricity Bill, or any other utility bill for the address proof of the Registered Office
♦ Copy of bank statement
♦ Email ID and mobile number
♦ Rent agreement on the name of the company (No Objection Letter (NOC) from the landlord with his/her consent to use the office as a registered office of a company must be submitted)
♦ Minimum 7 shareholders
♦ Minimum 3 Directors
♦ The minimum capital requirement is of Rs. 5 lakhs
♦ DIN for all directors
♦ The minimum number of shareholders must be 200 at the end of the 1st year
♦ Net owned fund should be more than Rs. 10 lakhs
♦ Unencumbered deposits of not less than 10% of the outstanding deposits
♦ The ratio for net owned funds to deposit should be more than 1:20
A Compliance Manager will get in touch with you to obtain your documents along with a simple checklist. You need to fill up that checklist and submit along with your documents for processing. Our expert team will verify documents and proceed with registration formalities. All throughout the process, your dedicated Compliance Manager will keep you updated on the progress of Company Registration.
Once you submit your documents along with Checklist, we will proceed with the application of your Digital Signature and subsequently name approval. You may give up to three names of your choice. Names should be unique and suggestive of Company’s business. We will proceed with name approval through a form called “RUN” as prescribed by MCA. Name approval is received usually 1-2 days.
Once a name is approved, we will draft MOA (Memorandum of association) and AOA (Articles of association). We will file incorporation documents with MCA through a form called “SPICe” along with subscription statement. Usually, MCA approves the forms within 2-3 days once filed and issues Incorporation Certificate with CIN. PAN & TAN are allotted alongside. You may then proceed to open your Company Bank Account.
Total 3 Directors and 7 Shareholders are required to register Nidhi Company.
A Nidhi company is registered as a Public Limited Company. Hence, the requirements for incorporation of a Nidhi company covered a minimum of three Directors and Seven Shareholders. However, the MOA of a Nidhi company must state that the primary objective of the proposed company is 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.
Both such entities are different on various levels. Nidhi is not regulated by RBI and Nidhi Company Registration requires a much smaller amount of capital as compared to Rs. 2 Crore paid capital requirement for NBFCs.
Nidhi Company Registration, as well as regulation, is done by the Ministry of Corporate Affairs. All the activities are done as per the provisions of Nidhi Rules, 2014.
NO, RBI approval is not required for them. Business can be started as soon as Nidhi Company Registration process is completed.
NO. Microfinance as the term specifies is small credit facility. It is a very famous business type in semi-urban and rural areas. However, in order to conduct microfinance business RBI approval is required and can only be done any large NBFCs.
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The Company uses the funds in lending to the Shareholder/members only as per the Nidhi company rules. Nidhi Company lending is in the shape of small loans for business and microfinance.
Only shareholders/Members of the Nidhi Company who have a membership ID, can invest in the scheme. To be a member, you must be 18-years and above as per age proof and must be a citizen of India.
No, as per Nidhi companies are not authorized to promote its activities through any kind of advertisement This is done because the main object of Nidhi is to promote the habit of thrift and saving habits among its member and not to solicit deposits through promotions to non-members.
Similarly, Nidhi Company is not authorized to remit any kind of brokerage or incentive for promotion or mobilization of deposits to members or granting loans.
No. Nidhi Company is not authorized to open a current account with its members.
Nidhi Company is not allowed to issue the following type of loans:
1. Personal Loans 2. Asset/ Vehicle finance 3. Microfinance 4. Hire-purchase