Nidhi Company: NBFC governed by Indian Companies Act, 2013, fostering thrift among members through mutual lending. Registration requires 7 members and ₹10 lakh net owned fund, offering affordable borrowing and simplified processes. Compliance includes minimum share capital, NOF, and documentation, with recent rules mandating transparency and accountability. True Auditor offers expert guidance for seamless Nidhi Company registration, ensuring legal compliance and customer satisfaction.
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An Overview
Nidhi Company, a non-banking finance sector company, regulated under Section 406 of the Indian Companies Act, 2013, accepts deposits from and lends to its members only, for their mutual benefit.
A Nidhi Company is a non-banking financial company (NBFC) operating in India, governed by the Nidhi Rules, 2014, and recognized under Section 406 of the Companies Act, 2013. Functioning as a public limited company, its core objective revolves around promoting thrift and savings among its members while providing financial assistance to them through lending.
To get a Nidhi Company registration in India, a minimum of seven members are required, and the company must possess a net owned fund of at least ₹10 lakhs. Unlike other NBFCs, Nidhi Companies are limited in their operations, restricted to borrowing and lending activities among their individual members only. They cannot accept deposits from the general public or engage in other financial activities. Although exempted from RBI registration, Nidhi Companies must adhere to specific regulations provided by the Ministry of Corporate Affairs (MCA) in India.
Benefits Of A NIDHI Company Registration
Affordable Borrowing
Being a member of a Nidhi company allows individuals to borrow money at a lower rate compared to banks. This provides a significant advantage during times of financial need, as different members may require funds at various points in time.
Promotes Saving
Nidhi companies encourage all their members to save money and cultivate a frugal lifestyle. By fostering a mutual benefit society, Nidhi registration enables members to lend or borrow money and receive financial assistance among themselves.
Simplified Process
Nidhi company registration online has a much simpler process than the banks or unauthorised lenders. Due to the well-organised incorporation processes, members of a Nidhi company can optimise the potential of their financial resources and have access to lower interest rates when they require cash for their own requirements.
What Is The Checklist For A NIDHI Company Registration In India?
- In India, a minimum of seven members are needed for registration of Nidhi.
- It needs 3 directors
- It can have upto 200 members
- A minimum equity share capital of ₹5 lakhs must be paid up in full
- Within a year of Nidhi registration, Net Owned Funds (NOF) must increase to ₹10 lakhs
The following conditions must be met:
- Unencumbered term deposits must make up at least 10% of the total amount of the company’s existing deposits
- One to twenty is the suggested NOF to deposit ratio. This includes equity share capital and free reserves. It excludes accumulated losses and intangible assets
- Additionally, at least 10% of the total deposits must be held in the fixed deposit account of a nationalised bank.
What Are Types Of Documents Required For NIDHI Company Registration?
The following documents has to be submitted from all the directors
- PAN card (self-attested copy)
- Driver’s license/Voter ID/Aadhaar card/passport (self-attested copy)
- Bank statement/telephone bill/mobile bill/electricity bill (self-attested copy)
- Passport-size photograph
- Specimen signature certificate
What Are The Latest NIDHI Company Rules?
By 2023, Nidhi firms having a share capital of ₹10 lakh or more were required to obtain a self-declaration from the central government before beginning operations. By establishing e-Nidhi Rules, Nidhi firms will be governed in a transparent, accountable, and democratic manner. Companies that match the criteria must file an application in Form NDH-4, including having a minimum of 200 members, a net owned fund of at least ₹20 lakh, and being considered as a fit and proper person. The application is judged successful after 45 days have elapsed without a response from the government. Existing Nidhi enterprises have 18 months to comply with these rules before new businesses are required to do so.
Important Facts Of NIDHI Companies
- Nidhi firms can be established without the RBI’s consent
- They are established as public corporations
- The term ‘Nidhi Limited’ must be added to their name
- Nidhi companies are regulated by the RBI, similar to NBFCs
- Their primary focus is on internal loan and borrowing activities, without involving external parties
- The Nidhi Rules of 2014 permit Nidhi firms to rent out locker facilities to their members
- The rental income from lockers should not exceed 20% of the total revenue during the fiscal year.
Why True Auditor?
True Auditor is a reliable choice for Nidhi company registration because of their expertise in legal services, simplified online processes, cost-effective solutions, and a dedicated team of professionals who guide you through the entire registration process, ensuring compliance with all legal requirements. Choosing True Auditor for Nidhi company registration online offers numerous advantages. With our expertise, simplified process, and experience in legal compliance, True Auditor ensures a smooth registration of Nidhi.. Our commitment to customer satisfaction and excellent service makes them a top choice in the industry.
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