Nidhi companies are the limited companies registered under Companies Act, 2013..The word Nidhi in Nidhi Company comes from awordwhich means treasure.
It has been incorporated with the aim of- utilizing money in a best possible manner and savings amongst its members, receiving deposits from and lending to its members only for their mutual benefit. and compliance with the rules as prescribed by Central Government. Nidhi company is similar to NBFC.
They are known as mutual benefit societies because their dealings are restricted only to the members
Benefits of Nidhi Company
- It give loans to and accept deposits only from its members.
- These companies does not require to conduct any activities related with chit funds, leasing, hire purchase
- It does not require any external involvement or accept deposits or give loans to any other person other than its members.
Why do People Register with Nidhi Company?
It is the cheapest and easiest form of NBFC and can be easily formed. It requires minimum seven members including subscribers to incorporate a Nidhi Company.It shall have the word Nidhi Limited as a part of its name. Like for example XYZ Nidhi Limited.
Conditions need to be satisfied for registration of Nidhi Company
- It should have a minimum net owned funds of Rs 10 lakhs or more.
- It should have at least 200 members or shareholders within a period of one year from its commencement.
- Deposits should not exceed 20 times from its net owned funds
- DIN & DSC of Directors.
- Proof of registered office address (Electricity Bill or Rent Agreement with rent receipt).
Beware of these Points Before Making a Nidhi Company
- Do not open any current account with its members
- Do not accept deposits from any person other than its members.