{"id":214,"date":"2020-12-12T12:12:12","date_gmt":"2020-12-12T12:12:12","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=214"},"modified":"2023-03-17T09:57:49","modified_gmt":"2023-03-17T09:57:49","slug":"how-is-nidhi-company-different-from-nbfc","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/","title":{"rendered":"How Is Nidhi Company Different From NBFC: A Complete Guide"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In India, the process\nof incorporation of a Nidhi Company requires less capital in comparison to the\nincorporation of an NBFC. Further, it shall be relevant to mention that a Nidhi\nCompany enjoys undeniably greater advantages than an NBFC. However, at the same\ntime, there are some restrictions wherein a Nidhi Company cannot perform\nactivities that of an NBFC. In this blog, we will discuss the concept How is a\nNidhi Company different from an NBFC?<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a4b27b474a\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a4b27b474a\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Concept_of_Nidhi_Company\" title=\"Concept of Nidhi\nCompany\">Concept of Nidhi\nCompany<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Key_Requirements_of_Nidhi_Company\" title=\"Key Requirements of Nidhi Company\">Key Requirements of Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Concept_of_Non_Banking_Financial_Company\" title=\"Concept of Non Banking Financial Company\">Concept of Non Banking Financial Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Key_Requirements_of_NBFC_Company\" title=\"Key Requirements of NBFC Company\">Key Requirements of NBFC Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#How_is_Nidhi_Company_Different_From_NBFC_Difference\" title=\"How is Nidhi Company Different From\nNBFC?: Difference\">How is Nidhi Company Different From\nNBFC?: Difference<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Objective_behind_Incorporation\" title=\"Objective behind Incorporation\">Objective behind Incorporation<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Eligibility_to_Conduct_any_Other_Business\" title=\"Eligibility to Conduct any Other\nBusiness\">Eligibility to Conduct any Other\nBusiness<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-2\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-2\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Right_to_Acquire_Securities\" title=\"Right to Acquire Securities \">Right to Acquire Securities <\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-3\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-3\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Need_for_RBI_Approval\" title=\"Need for RBI Approval\">Need for RBI Approval<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-4\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-4\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Issuance_of_Debentures\" title=\"Issuance of Debentures\">Issuance of Debentures<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-5\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-5\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Issuance_of_Preference_Share_Capital\" title=\"Issuance of Preference Share\nCapital\">Issuance of Preference Share\nCapital<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-6\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-6\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Open_a_Current_Bank_Account\" title=\"Open a Current Bank Account\">Open a Current Bank Account<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-7\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-7\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Compulsory_Conditions\" title=\"Compulsory Conditions\">Compulsory Conditions<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-8\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-29\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-8\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-30\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Brokerage_and_Incentives\" title=\"Brokerage and Incentives\">Brokerage and Incentives<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-31\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-9\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-32\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-9\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-33\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Process_of_Registration\" title=\"Process of Registration\">Process of Registration<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-34\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-10\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-35\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-10\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-36\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Operations_outside_the_Registered_State\" title=\"Operations outside the Registered\nState\">Operations outside the Registered\nState<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-37\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-11\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-38\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-11\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-39\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Eligible_to_Enter_into_Partnership\" title=\"Eligible to Enter into Partnership\">Eligible to Enter into Partnership<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-40\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-12\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-41\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-12\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-42\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Net_Owned_Fund_Requirements\" title=\"Net Owned Fund Requirements \">Net Owned Fund Requirements <\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-43\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-13\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-44\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-13\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-45\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Capital_Investment_Requirement\" title=\"Capital Investment Requirement\">Capital Investment Requirement<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-46\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-14\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-47\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-14\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-48\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Requirement_of_Advertisement\" title=\"Requirement of Advertisement \">Requirement of Advertisement <\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-49\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Nidhi_Company-15\" title=\"Nidhi Company\">Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-50\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#NBFCs-15\" title=\"NBFCs\">NBFCs<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-51\" href=\"https:\/\/swaritadvisors.com\/blog\/how-is-nidhi-company-different-from-nbfc\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Nidhi_Company\"><\/span>Concept of Nidhi\nCompany<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term \u201cNidhi Company\u201d denotes a business format that is governed and regulated by section 406 of the <strong>Companies Act 2013<\/strong><sup><a class=\"text-primary\" href=\"https:\/\/en.wikipedia.org\/wiki\/Companies_Act_2013\"><strong>[1]<\/strong><\/a><\/sup>. It is a business structure that is incorporated with the aim to encourage the habit of saving and thrift among its members. Also, a Nidhi Company receives deposits and lends money to its members only. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Requirements_of_Nidhi_Company\"><\/span>Key Requirements of Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key requirements of a Nidhi Company are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Key-Requirements-of-Nidhi-Company.png\" alt=\"Key Requirements of Nidhi Company\" class=\"wp-image-224\" width=\"571\" height=\"425\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Key-Requirements-of-Nidhi-Company.png 1000w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Key-Requirements-of-Nidhi-Company-300x224.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Key-Requirements-of-Nidhi-Company-768x572.png 768w\" sizes=\"(max-width: 571px) 100vw, 571px\" \/><\/figure><\/div>\n\n\n\n<ol><li>Requires\nRs 5 lakh as Minimum Capital;<\/li><li>Needs\na Minimum of 7 Members and 3 Directors;<\/li><li>A\nMinor is not eligible to become the Member of a Nidhi Company;<\/li><li>Requires\nat least 200 members within 1 year of Incorporation ;<\/li><li>Total\nDeposits must not be less than 10% of the Outstanding Deposits;<\/li><li>Requires\nRs 10 lakh as NOF (Net Owned Fund);<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Non_Banking_Financial_Company\"><\/span>Concept of Non Banking Financial Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term NBFC or Non-Banking Financial Company or NBFC denotes a company that is incorporated under the provisions of the Companies Act 2013. The main aim of this business format is to offer long term and specialized credit services to the customers. Further, it shall be relevant to state that a Nidhi Company works for the benefit of its members. In contrast, an <strong><a href=\"https:\/\/swaritadvisors.com\/nbfc-registration\" class=\"text-primary\">NBFC registration<\/a><\/strong> works to fulfil the financial needs of the weaker section of the society.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Requirements_of_NBFC_Company\"><\/span>Key Requirements of NBFC Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key requirements of an NBFC Company are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Key-Requirements-of-NBFC-Company.png\" alt=\"Key Requirements of NBFC Company\" class=\"wp-image-221\" width=\"621\" height=\"270\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Key-Requirements-of-NBFC-Company.png 1000w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Key-Requirements-of-NBFC-Company-300x131.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Key-Requirements-of-NBFC-Company-768x335.png 768w\" sizes=\"(max-width: 621px) 100vw, 621px\" \/><\/figure><\/div>\n\n\n\n<ol><li>Needs\nto be Incorporated under the provisions of the Companies Act 2013;<\/li><li>Requires\nRs 2 crore as Minimum Net Owned Fund;<\/li><li>Business\nActivity must be defined under section 45I (a) of the RBI Act 1934;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_is_Nidhi_Company_Different_From_NBFC_Difference\"><\/span>How is Nidhi Company Different From\nNBFC?: Difference<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key factors on which a Nidhi Company\nis different from NBFC are as follows:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Objective_behind_Incorporation\"><\/span>Objective behind Incorporation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Nidhi Companies are incorporated with an\naim to inculcate the habit of thrift and savings among its members and to\nsatisfy their financial needs.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The main behind the incorporation of an\nNBFC is to provide financial assistance to the small businesses and weaker\nsections of the society. Therefore, NBFC, as a business structure, plays a\ncrucial role in the growth of the economy.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_to_Conduct_any_Other_Business\"><\/span>Eligibility to Conduct any Other\nBusiness<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-2\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A Nidhi Company is not allowed to\nundertake any other business transaction, such as Chit Fund, Lending Business,\nand Hire Purchase, etc., It is allowed to undertake only those activities and\ntransactions that are covered under Nidhi Scheme. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-2\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>An NBFC can carry out the activities of\nHire Purchase, Chit Fund, and Lending Business, etc.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Right_to_Acquire_Securities\"><\/span>Right to Acquire Securities <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-3\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>In India, a Nidhi Company cannot acquire\nor buy securities in the form of stocks or shares that has been issued by the\ncompany.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-3\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>In contrast, a Non-Banking Financial\nCompany or NBFC can acquire securities in the form of stocks and shares.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Need_for_RBI_Approval\"><\/span>Need for RBI Approval<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-4\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>There is no need for a Nidhi Company to\nobtain prior approval from RBI regarding the commencement of Business\nActivities.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-4\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>In contrast, an NBFC does require prior\napproval from RBI regarding the commencement of Business Activities.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Issuance_of_Debentures\"><\/span>Issuance of Debentures<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-5\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A Nidhi Company is not eligible to issue\ndebentures to third parties.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-5\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>An NBFC can issue debentures to the\nthird parties.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Issuance_of_Preference_Share_Capital\"><\/span>Issuance of Preference Share\nCapital<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-6\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A Nidhi Company is not eligible to issue\npreference share capitalto its members.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-6\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>An NBFC can issue preference share\ncapital to its members.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Open_a_Current_Bank_Account\"><\/span>Open a Current Bank Account<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-7\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A Nidhi Company is not allowed to open a\ncurrent bank account in its name by the government.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-7\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>An NBFC can open a current bank account\nin its name.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Compulsory_Conditions\"><\/span>Compulsory Conditions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-8\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>In India, a Nidhi Company is permitted\nto have branch offices only till the time it earns profit continuously for a\nperiod of 3 years.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-8\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>There is no such condition or\nrestriction applicable to an NBFC.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Brokerage_and_Incentives\"><\/span>Brokerage and Incentives<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-9\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A Nidhi Company is\neligible to pay Incentives and Brokerage while receiving deposits and granting\nloans to its members. However, it shall be pertinent to note that only on the\nbasis of a fixed salary, a Nidhi Company can employ people.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-9\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>There is no such condition or\nrestriction applicable to an NBFC. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Process_of_Registration\"><\/span>Process of Registration<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-10\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The process of <strong><a href=\"https:\/\/swaritadvisors.com\/nidhi-company-registration\" class=\"text-primary\">Nidhi Company Registration<\/a><\/strong> involves comparatively fewer compliance requirements than an NBFC.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-10\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The process of NBFC Registration is not\nonly lengthy in nature but involves a lot of compliance and intricacies as\nwell.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Operations_outside_the_Registered_State\"><\/span>Operations outside the Registered\nState<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-11\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A Nidhi Company acts as a brand within a\nstate and is not allowed to carry out operations anywhere other than the\nregistered state. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-11\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>An NBFC is eligible to operate PAN\nIndia.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligible_to_Enter_into_Partnership\"><\/span>Eligible to Enter into Partnership<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-12\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>In India, for the purpose of lending and\nborrowing, a Nidhi Company is not eligible to enter into a partnership with any\nother business format.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-12\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>There is no such condition or\nrestriction applicable to an NBFC. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Net_Owned_Fund_Requirements\"><\/span>Net Owned Fund Requirements <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-13\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A Nidhi Company requires a minimum of Rs\n10 lakhs as NOF (Net Owned Fund).<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-13\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>An NBFC requires a minimum of Rs 2\ncrores as the Minimum NOF (Net Owned Fund).<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Capital_Investment_Requirement\"><\/span>Capital Investment Requirement<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-14\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A Nidhi Company requires comparatively\nless capital investment than an NBFC.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-14\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A Non Banking Financial Company requires\na lot of amount as capital investment for its incorporation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Requirement_of_Advertisement\"><\/span>Requirement of Advertisement <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company-15\"><\/span>Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>In India, a Nidhi Company is not\neligible to advertise itself for accepting deposits.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs-15\"><\/span>NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>An NBFC is permitted to advertise its\nservices and operations to accept or issue loans, deposits, etc.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a nutshell, the concept of Nidhi\nCompany is slowly emerging in India on a big scale due to its undeniable\nbenefits and advantages. However, at the same time, it shall be relevant to\nstate that there are certain restrictions as well that significantly affect its\ngrowth level.<\/p>\n\n\n\n<p>Also, this business format deals only\nwith the financial needs and deposits of its member. In contrast, NBFCs are\nincorporated to satisfy financial needs on a larger platform. <\/p>\n\n\n\n<p>Therefore, it can rightly be stated that\na Nidhi Company works on the concept of Mutual Benefit, whereas an NBFC\noperates on the concept of communal benefit.<\/p>\n\n\n\n<p>Lastly, in case of any other doubt or perplexity, reach out to Swarit Advisors, our proficient and skilled experts will cater to all your needs regarding Nidhi Company Registration and NBFC Registration.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/is-it-possible-to-make-members-in-nidhi-company\/\">Is it Possible to Make Members in Nidhi Company: Step by Step Guide\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In India, the process of incorporation of a Nidhi Company requires less capital in comparison to the incorporation of an NBFC. Further, it shall be relevant to mention that a Nidhi Company enjoys undeniably greater advantages than an NBFC. However, at the same time, there are some restrictions wherein a Nidhi Company cannot perform activities [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":216,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[8],"tags":[90],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/214"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=214"}],"version-history":[{"count":23,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/214\/revisions"}],"predecessor-version":[{"id":12654,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/214\/revisions\/12654"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/216"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=214"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}