Nidhi Company is defined under Section 406 of Companies Act, 2013and Companies (Nidhi Companies) Rules, 2014.A Nidhi company belongs to the class of non-banking finance sector firms. The Nidhi Companies is governed/ruled by the Central Government. Reserve Bank of India (RBI) is empowered to give directions regarding the matters related to acceptance of deposits. The rudimentary business of Nidhi Company is to empower lending money and encouraging savings between the members of the company.
Minimum paid up share capital required for Nidhi company registration is only five lakh rupees. Every Company must be registered as a Nidhi. Compulsorily shall have last words as 'Nidhi Limited' as parts of its name. The company should have minimum 3 directors and 7 members. The first director of the company can be the member in the company.
Every Nidhi Company within the period of one year from the commencement, shall have
|Type of Deposit accepted||Term|
|Fixed Deposit||Minimum: 6 months
Maximum: 60 months
|Recurring Deposit||Minimum: 12 months
Maximum: 60 months
|Directors: (3 directors)||Company formation|
After DIN & DSC Name approval and rest incorporation Documents form filing.
The members of the Nidhi company can borrow at a cheaper rate from its own company at a cheaper rate as compared to the borrowing from banks. This is one of the major benefit to the members at in their difficult time or when they are in need.
One of the objectives of Nidhi company to encourage saving among the members of the company and thus to achieve mutual benefit the Nidhi Company lend and borrow money from its members only.
Borrowing and lending to known persons i.e its members, where the procedure is fixed, is much less complex than dealing with banks. A Nidhi Company allows its members to expose the potential of their money and gain at lower interest rate when they are in need of money themselves.