Nidhi Company is a preferred choice of the entrepreneurs who wants to get into Financial Services in which the Nidhi Company can accept deposits and lend money only to its individual members subject to the conditions of Nidhi companies Act, 2014.
Nidhi Companies Having following Features.
It is Non- Banking Financial Company under the purview of RBI though it will not be governed under stringent guidelines.
It will be a public company and shall have a minimum paid up equity share capital of five lakh rupees.
The primary object of Nidhis has been to carry on the business of accepting
Deposits and lending money to member-borrowers only against jewels, etc., and mortgage of property.
It Requires minimum 3 Directors & 7 share holders
A Nidhi shall not accept deposits exceeding twenty times of its Net Owned Funds (NOF) as per its last audited financial statements.
Every Company incorporated as a “Nidhi” shall have the last words ‘Nidhi Limited’ as part of its name
No Nidhi shall issue preference shares.
No Nidhi shall have any object in its Memorandum of Association other than the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.
Mandatory for Nidhi Companies
Within the Period of One Year from the date of commencement, it should have
Minimum 200 Members
Net Owned Fund should be Minimum 10 Lakh
Unencumbered term deposits of not less than ten per cent
Ratio of Net Owned Funds to deposits of not more than 1:20.
Ideal way for getting into Financial Services Industry
All landings to members will be secured lending
Can accept deposits.
Lending only to Members
No carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any- body corporate
Issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever
Open any current account with its members;
Acquire another company by purchase of securities or control the composition of the Board of Directors.
Cannot run micro finance
Cannot invest in any company
No advertisement allowed
Unsecured loans, i.e. it cannot extend loan based upon surety, guarantee, ITR based etc.
No Micro finance work can be done under Nidhi Company and no vehicle loans, etc.
A Nidhi cannot pay commission to leverage deposits.
A Nidhi cannot invest in land, in other companies, in stock market etc.
Time for Registration
It takes around 30 to 45 days to complete the company registration process subject to MCA approvals.