What is Nidhi Company
NBFC carrying on the business of borrowing and lending in any manner, other than deposit acceptance, is a Nidhi Company. These companies are gaining momentum, especially in South India, because they provide the essence of community-based savings. These companies were established to develop savings and financial responsibility habits among their members. Unlike other NBFCs, the Nidhi Companies cannot operate or function in offering or taking deposits from non-members. Incorporating a Nidhi Company is easier as it does not require to have licenses from the Reserve Bank of India.
Key Features of a Nidhi Company:
1. Membership-Based Structure: Only the members of the Nidhi Company can deposit or lend money.
2. No Requirement for RBI License: Nidhi Companies function without taking any licenses from the Reserve Bank of India.
3. Encourages Habit of Saving: Nidhi Company inculcates a habit of saving amongst its members by a making loan available to them at reasonable rates.
4. Less External Regulation: Although the MCA regulates them, RBI does not.
Advantages of Incorporation of a Nidhi Company
- Easy and Economical Incorporation Process
- The capital required to start a Nidhi Company is relatively low, and the registration procedure is easier than other financial organizations.
- Limited Liability
- Financial Inclusion
- Secured Loans at Low Interest Rates
- Savings Culture
Eligibility Criteria for Registration of Nidhi Company in India
- Minimum 7 Members: There shall be at least 7 members of a Nidhi Company, out of which at least 3 shall be directors.
- Minimum Capital Requirement: The company shall have at least Rs. 10 lakhs paid-up equity share capital.
- No External Involvement: It shall not carry on any business except the borrowing and lending of money to and from its own members.
- Registered Office Address: It shall have a registered office in India.
Documents required for Nidhi Company Registration
For Directors/Shareholders:
- PAN Card (mandatory for Indian nationals)
- Identity Proof (Aadhar Card, Voter ID, Passport, Driving License)
- Address Proof (Utility Bill, Bank Statement, etc.)
- Passport-sized Photographs
For the Company:
- Name that is proposed for the company
- MOA and AOA explain the objectives and rules of the company
- Proof of Registered Office Address: Rent Agreement, Electricity Bill, etc.
- NOC from the property owner, if applicable
Procedure to Register a Nidhi Company in India
1. Obtain DSC (Digital Signature Certificate)
2. Apply for DIN (Director Identification Number)
3. Name Approval
4. Draft MOA and AOA
5. Incorporation of Company and Compliance Filing
Post-Incorporation Compliance of Nidhi Companies
- Minimum Membership Requirement: It has to have at least 200 members within the first year of the Nidhi Company
- Net Owned Funds: The NOF/deposits ratio should be 1:20. The company should maintain this ratio to continue operations.
- Restrictions in Lending: A Nidhi Company shall not lend more than Rs. 2 lakhs when the loan is an unsecured loan and Rs. 15 lakhs when the loan is a secured one.
- Annual Returns and Filings: Nidhi Companies are required to file annual returns and financial statements with the MCA, and their accounts have to be audited every year.
- No Advertisements: Nidhi Companies cannot advertise for membership. Membership could only be accepted through the word-of-mouth method within the community.
Why Choose YKG Global for Registration of Nidhi Company?
Expert Consultation: Our team of experienced professionals offers personalized consultation that guides you properly to make the right decisions for your business.
Competitive Pricing: We ensure that our pricing is transparent, with no hidden charges, so that you receive true value for money.
Fast and Smooth Process: Our seamless processes ensure that your Nidhi company gets registered in as little as 10-15 working days.
