A Nidhi Company is a Non-Banking Financial Institution or an NBFI type. The Companies Act delegates a Nidhi to primarily provide services, such as accepting deposits and lending money among its exclusive members. In India, a Nidhi Company's registration and post-incorporation procedures are regulated by the Ministry of Corporate Affairs as per the directives of the Companies Act of 2013. Before exploring the benefits of registering a Nidhi Company license with the MCA, let us first understand the uniqueness as well as the features of a Nidhi Company in the Indian jurisdiction.
Features of a Nidhi Company in India
For your reference, some of the defining features of a Nidhi Company licensee is explained in the following subsection.
1. Nidhi limits the Liability of its Members
Every Nidhi incorporated Company is a limited liability entity because the liability of its members is limited to the number of shares they subscribe to that Nidhi.
2. A Nidhi can be incorporated easily
You can incorporate a Nidhi with minimal requirements and no formalities. It has become a popular choice among small businesses willing to run a saving scheme or thrifting. Also, to register as a Nidhi, the MCA mandates only seven shareholders and a minimum of three directors.
3. A Nidhi need not adhere to major Compliance
Nidhi companies have a lower compliance burden than other companies, as they are exempt from several provisions of the Companies Act 2013.
4. A Nidhi can lend funds to its Members
A Nidhi Company can lend money to their members only, so many are attracted to such options as they are looking for affordable loans with lesser collateral.
5. A Nidhi sits on Stable Funds from its members
A Nidhi Company gets funded by the deposits of their exclusive members. Such a stable income from the members' confidantes Nidhi a stable source of income.
6. Nidhi offers high-Interest Rates to its depositors
Nidhi Companies usually offer higher interest rates to their depositors than traditional banks. This is the sole selling point of a Nidhi company. It makes them a popular choice among loan seekers.
In a nutshell, the benefits of a Nidhi Company to its members are:
· Easy access to Credit for Loan seekers
· Higher Interest Rates on Deposits
Here, every Nidhi Company in India is subject to strict regulations by the MCA. He must also comply with the stated regulations.
Why must you apply for Nidhi Company registration in India?
Registering a Nidhi company is imperative per the Ministry of Corporate Affairs directives. In addition to this, running a Nidhi Company, which is legally registered in the Company Registers and is under the surveillance of the MCA for the purpose of entity regulations, has many benefits to it, such as the following:
1. Nidhi registration gets Legal Recognition from the Company
Registering your Nidhi company with the Ministry of Corporate Affairs gives your Company legal recognition and a separate legal entity status.
2. Personal Asset Protection for Nidhi Members
Each Nidhi Member has limited liability as their personal assets are protected if any financial liability arises from Nidhi’s operations or goes bankrupt.
3. A licensed Nidhi is a credible Firm in the market
A registered Nidhi company with the MCA has an enhancing effect on its credibility in the market. It also makes it easier for Nidhi to attract investors.
4. A registered Nidhi Company is more accessible for Bank Loans
Every registered Nidhi is eligible for bank loans to expand its business in the market. As a promoter of savings and thrift, a Nidhi can easily apply for and get a loan amount from Banks, as a registered Nidhi holds a reputation in the market.
5. A Nidhi can exist perpetually
A registered Nidhi has perpetual existence, i.e., it can continue to exist even with member updation.
6. A registered Nidhi can avail of Tax Exemptions
A registered Nidhi can apply for various tax benefits, such as exemptions under Section 80C and Section 10(26) of the Companies Act.
7. A registered Entity has better Corporate Governance
If you register your Nidhi with the Ministry of Corporate Affairs, then it ensures the Authority that the Nidhi follows the stipulated regulations governing corporate Governance in India.
Registering your Nidhi with the MCA can help your business grow and prosper. For more on Nidhi Company license registration, connect with the Incorporation Team at Registrationwala.
Also read: Benefits of Producer Company Registration to Farmers