A Nidhi Company is a company that closely resembles NBFC as it is one of the easiest and most affordable ways to start a loan business in India. It only requires 7 persons to Form Nidhi Company. The minimum capital requirement for Nidhi Company registration is Rs.5 lakh.
A Nidhi Company is registered to borrow and lend to its members to promote the habit of saving money among its members and works on the principle of mutual help. Unlike an NBFC a Nidhi Company is not required to obtain a license from RBI; hence it is easy to incorporate.
Nidhi Company can open three branches after three years of working within the district. Further, to open any branch outside the district, the company shall require RD approval. Furthermore, the Nidhi Company cannot work outside the state.
| Company Details | |
| Act | Companies Act, 2013 |
| Registration Requirement | Mandatory |
| Number of members | Unlimited |
| Separate Legal Entity | Yes |
| Liability Protection | Limited |
| Statutory Audit | Mandatory |
| Ownership Transferability | Unrestricted |
| Uninterrupted Existence | Yes |
| Foreign Participation | Allowed |
| Tax Rates | Moderate |
| Statutory Compliances | High |
Tags: Nidhi, company, starting, business, India, registration, Nidhi Company Registration nidhi, india
Nidhi Companies belong to the Non-banking financial companies structure. Registering a Nidhi Company allows a Nidhi to borrow from its members and lend to the members. Nidhi Companies registered in India are created to cultivate the habit of thrift and savings among its members. The funds that are contributed to a Nidhi Company are only from its members. For Incorporating a Nidhi Company, no license is required from the Reserve Bank of India. Hence, the formation of the Nidhi Company is easy. Nidhi Companies are registered as Public Companies and should have Nidhi Limited at the last of the name.
It should also be noted that the Nidhi Companies fall under the purview of the Reserve Bank of India as the functioning of Nidhi Companies is similar to NBFCs.
Activities like Chit Fund, Hire-Purchase Finance, Leasing Finance, Insurance or Securities Business are strictly prohibited in Nidhi Company
The minimum capital requirement for Nidhi Company registration is Rs.5 lakh
It starts with 7 members as a public limited company, however, to obtain a Nidhi Company Status it needs at least 200 members in a year.
Digital Signatures of 7 Subscribers
DIN of Directors
Pan Card of all Directors and Subscribers
Aadhar Card of all Directors and Subscribers
Driving License/Passport/Voter Card of all Directors and Subscribers
Utility bill of all Directors and Subscribers
Passport Size Photographs of all Directors and Subscribers
What do you mean by Nidhi Company rules?
Nidhi Company is not governed by the RBI but by the central government and hence the central government has introduced the Nidhi Company rules 2014 in order to better govern the company in a more transparent manner.
Can a Nidhi Company do microfinance business?
No, Nidhi Company is not allowed to do microfinance business in India. This is because microfinance is a completely different set of business for an NBFC and requires more capital to do the same.
Does Nidhi Company require any NBFC license from RBI?
No, Nidhi Company does not require any RBI license to start the business in India; this is because Nidhi Company has been exempted by the RBI from its core provisions.
How many branches a Nidhi Company can open?
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's (RD) permission. Also, a Nidhi Company cannot open a branch outside the state.
What is the maximum amount of deposits a Nidhi Company can take?
A Nidhi Company is allowed to take a maximum of 20 times the net owned fund. Net owned fund means the total fund invested by the owner less any accumulated loss.
How many people are required to register a Nidhi Company?
Is an office required to start a Nidhi Company?
An address in India where the registered office of the Company will be situated is required. The premises can be commercial/industrial/residential where communication from the MCA will be received.
What is a Digital Signature Certificate?
A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature.
Do I have to be present in-person to incorporate a Nidhi Company?
No, you don’t have to be present at our office or appear at any office for the registration of a Nidhi Company.
What are the requirements to be a Director?
The Director needs to be over 18 years of age and must be a natural person.
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