Nidhi Company Price - 9999/- + Govt. Fee Extra Book Now

The feature that differentiates Nidhi Company from other companies NBFCs etc. is that Nidhi deals with deposits from and loans to its members (shareholders) only and work for the mutual benefits of its members. Accordingly, certain exemptions have been provided to these companies in respect of annual compliances and taxation.

Nidhi Companies in India are formed, governed, and regulated by Section 406 of the Companies Act of 2013 and Nidhi Rules, 2014. "Nidhi" means a company which has been incorporated as a nidhi with the object of cultivating the habit of thrift and saving amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with the rules made by the central Government for regulation of such class of companies.

Nidhi Company is a certain category of NBFC. Though not directly regulated by the RBI, still RBI has powers to issue directives for them related to their deposit acceptance activities. Moreover, because these Nidhis deal with their shareholder-members only, they have been exempted from the core provisions of the RBI Act and other directions applicable to NBFCs. Therefore, Nidhi Company is an ideal legal entity to take a deposit from and lend to a specific group of people.

Minimum requirements for Nidhi Company incorporation

1. Minimum 200 members
2. Net Owned Funds of Rs. 10 lakhs or more;
3. Unencumbered term deposits of atleast 10% of the outstanding deposits;
4. Ratio of Net Owned Funds to deposits not more than 1:20;
5. Issuance of shares of nominal value of atleast Rs. 10 each;
6. To allot a minimum of 10 equity shares or shares equivalent to Rs. 100.
7. Self-attested copies of KYC documents of Shareholders / Director (PAN, Aadhar & Bank Statement (Not older than 2 months)
8. Latest one colour photograph of all Shareholders / Director
9. Proof of Registered Office Address (Electricity Bill / Phone Bill / Water Bill) (Not older than 2 months)
10. NOC from the owner of premises
11. Consent from all the Directors in the Form No. DIR-2

Note: Net Owned Funds = aggregate of paid up equity share capital + free reserves - accumulated losses and intangible assets appearing in the last audited balance sheet)

In order to clarify point no. 4, let us take an example; Company X has 20 equity shares of face value of Rs. 10 each. Mr. A, an individual shall be required to subscribe atleast 10 equity shares in order to deposit Rs. 2000 in the Company. Further, as evident, such subscription of equity shares shall not provide any interest to the deposit holder, but, shall form part of the shareholders’ funds of the company.

REQUIREMENTS W.R.T DEPOSITS AND LOANS
As mentioned above, the objective of a Nidhi company is to take deposits and provide loans to its members. The Ministry of Corporate Affairs (MCA) being the regulator of Nidhi companies has regulated the norms for taking deposits and providing loans which are as follows:

Deposits
The Nidhi Company shall be allowed to accept deposits with the following timelines:

1. Fixed deposits- 6 to 60 months
2. Recurring deposits- 12-60 months

Recurring deposits relating to mortgage loans- Maximum period shall correspond to the repayment period of loans granted.
Interest rate on deposits

1. Savings Account- Maximum 2% above the rate allowed by nationalized banks
2. Fixed and Recurring deposits- At par with the RBI rate

Loans
A Nidhi company can provide loan to its members as per the following ceiling limits:

1. Where total amount of deposits from its members is less than Rs. 2 Cr- Rs. 2 lakhs
2. Where total amount of deposits from its members is more than Rs. 2 Cr but less than Rs. 20 Cr- Rs. 7.50 lakhs
3. Where total amount of deposits from its members is more than 20 Cr but less than Rs. 50 Cr- Rs. 12 lakhs
4. Where total amount of deposits from its members is more than Rs. 50 Cr- Rs. 15 lakhs

Interest rates of loans
The interest charged on any loan given by a Nidhi company shall not exceed 7.5% above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing balance method.

General Restrictions or Prohibitions
Similar to a NBFC, there are certain restrictions or prohibitions on Nidhi companies as well.
Some of the major restrictions or prohibitions of a Nidhi company are that it shall not:

1. carry on the business of chit fund, hire-purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
2. open any current account with its members;
3. accept deposits from or lend to any person, other than its members;
4. carry on the business other than the business of borrowing or lending in its own name;
5. take deposits or lend money to any body corporate;
6. issue of advertisements in any form soliciting deposits;
7. pay brokerage in order to mobilize deposits from members or for deployment of funds or for granting loans

Compliances to be made by Nidhi companies
Nidhi companies shall be required to do the following compliances:

1. Filing of return of statutory compliances in e-Form NDH-1– Within 90 days of the close of first F.Y. and where applicable, the second F.Y.
2. Filing of non-compliance with the conditions mentioned w.r.t incorporation of a Nidhi company such as minimum no. of members, Net Owned Funds etc. in e-Form NDH-2– Within 30 days of the close of first F.Y.
3. Filing of half-yearly return in e-Form NDH-3– Within 30 days of the conclusion of each half year.