Nidhi Company Registration in India
Nidhi Company is a business entity in India governed under the Companies Act 2013. Its sole objective is to engage with thrift and savings among its members. A Nidhi Company is a Non-Banking Financial Institute that exclusively provides services like lending and deposits to its members. Therefore, it can be said a Nidhi Company in India only consists of funding from its members and shareholders.
Starting a Nidhi Company in India means starting a Non-Banking Financial Companies class. They are governed by the Reserve Bank of India. This body tells the registered Nidhi Company guidelines about lending and depositing activities. However, Nidhi Companies can only deal with their members. Therefore outside members are not allowed.
Why should you register a Nidhi Company?
Nidhi Company is one of the business entities that enjoy several company perks. The following are those perks that make Nidhi Company Registration quite a beneficial affair:
Easy Access to Loans
Nidhi Company is a recognized infrastructure by the Central Government. It is trusted more by the banks. Therefore, once you register a Nidhi Company, acquiring loans and other types of findings is easy
A Nidhi Company enjoys a continued existence even after one of the directors is deceased.
Easy to Incorporate
The Incorporation of a Nidhi Company is quite easy. It follows the standard procedure of Company Registration in India.
Separate Legal Identity
After forming a Nidhi Company, it becomes a separate legal identity in India. It can be said that a Nidhi Company becomes a separate individual who shall be able to own a property, invest, etc.
A Nidhi Company enjoys limited liability for its members. This means that in the event of loss, the members of the Nidhi Company won't have their assets harmed.
Nidhi Regulations regarding Deposits
A registered Nidhi can accept deposits for a minimum of six months and a maximum of sixty months. A Nidhi can accept recurring deposits for a minimum of twelve months and a maximum of sixty months. But the maximum balance in a savings deposit account at any given time must not exceed one lakh rupees.
In addition, the interest rate must not exceed two per cent above the interest rate payable on the savings bank account by nationalized banks. A Nidhi must offer interest on fixed and recurring deposits at a rate not exceeding the maximum interest rate prescribed by the Reserve Bank of India. It must also foreclose a fixed deposit account or a recurring deposit account of a depositor subject to the following conditions:
- A Nidhi must not repay any deposit within three months from its acceptance.
- A Nidhi, at the depositor's request, must repay any deposit after three months. Furthermore, the depositor must not be entitled to any interest up to six months from the date of deposit.
- At the depositor's request, a Nidhi must repay a deposit before the expiry of the period for which Nidhi accepted the such deposit. In addition, the rate of interest payable by Nidhi on such a deposit must be reduced by two per cent from the rate Nidhi would have ordinarily paid.
Nidhi Regulations regarding Loan Disbursal
A Nidhi must provide loans only to its members. The loans given by a Nidhi to a member must be subjected to the following limits:
- Two lakh rupees, where the total amount of deposits of such Nidhi from its members is less than two crore rupees;
- Seven lakh fifty thousand rupees, where the total amount of deposits of such Nidhi from its members is more than two crore rupees but less than twenty crore rupees;
- Twelve lakh rupees, where the total amount of deposits of such Nidhi from its members is more than twenty crore rupees but less than fifty crore rupees; and
- Fifteen lakh rupees, where the total amount of deposits of such Nidhi from its members is more than fifty crore rupees:
- The deposits must be calculated based on the last audited annual financial statements.
- A Nidhi must give loans to its members only against the following securities:
- Gold, silver, and jewellery
- Immovable Property
- Fixed Deposit Receipts
- National Savings Certificates
- Other Government Securities
How to register a Nidhi Company?
The Companies Act, Nidhi Rules of 2014, regulate the Nidhi Companies. The procedure for online Nidhi company registration in India is as follows:
- Choosing a unique name for the Nidhi company. Conduct the Nidhi company name search. You can also hire Nidhi experts for Nidhi Company name suggestions.
- Reserving the name of the Nidhi company using the RUN application
- Obtaining the DSC and DIN of the directors of the company
- Drafting MOA and AOA of the company
- Submitting the online application for Nidhi company incorporation
- Assessment of the application by the Ministry of Corporate Affairs
Eligibility Criteria for Nidhi Company Registration in India
Among the general eligibilities, some of them are followingly discussed. The minimum number of allowed directors for Nidhi Company registration is three. At least one director of the Nidhi Company should be from India. Also, the minimum number of allowed shareholders in a Nidhi Company is seven. Lastly, the minimum equity share capital for a Nidhi company registration is INR 5 Lakh. Now, let us get into the specifics of such eligibilities.
Rules of Incorporation
- A to-be-incorporated Nidhi Company must be a public company.
- A to-be-incorporated Nidhi Company must have a minimum paid-up equity share capital of five lakh rupees.
- A to-be-incorporated Nidhi Company must issue preference shares.
- A to-be-incorporated Nidhi Company must not have any object in its Memorandum of Association other than cultivating the habit of thrift and savings amongst its members.
- A to-be-incorporated Nidhi Company must have 'Nidhi Limited' as the last part of its name.
Share Capital and Allotment
- Every Nidhi must issue equity shares of the nominal value of not less than ten rupees each.
- No service charge must be levied for the issue of shares.
- Every Nidhi must allot at least ten equity shares or shares equivalent to one hundred rupees to each deposit holder. A savings account holder and a recurring deposit account holder must hold at least one equity share of rupees ten.
- A Nidhi must not admit a corporate body or trust as a member.
- A Nidhi must ensure that its membership is not reduced to less than two hundred members.
- A Nidhi must not admit a minor as a member, provided that deposits can be accepted in the name of a minor if their legal guardian is also a member of Nidhi.
Every Nidhi must maintain Net Owned Funds (excluding the proceeds of any preference share capital) of not less than ten lakh rupees or such higher amount as the Central Government may specify from time to time.
Rate of interest
A Nidhi company must charge an interest rate on any loan that must not exceed seven and a half per cent above the highest rate of interest offered on deposits by Nidhi. The rate of interest must be calculated on the reducing balance method.
Rules relating to Directors
- The director of a Nidhi must be its member.
- The director of a Nidhi must hold office for up to ten consecutive years on the Board of Nidhi.
- The director of a Nidhi must be eligible for re-appointment only after the expiration of two years of ceasing to be a Director.
- The director of a Nidhi must comply with the requirements of the Nidhi Act. In addition, they must not have been disqualified from any appointment.
Documents Required for Nidhi Company Registration in India
Following are the documents required for company incorporation for each director/ shareholder:
- Self-attested PAN card copy.
- Four Photographs.
- Self-attested copy of any one of the Identity Proofs like Driving License, Passport, Voter ID & Aadhaar Card
- Self-attested copy of any one of the Addresses Proof like Bank Pass Book/ Bank Statement, Telephone Landline Bill, Mobile Bill & Electricity Bill
- Company Address proof Electricity Bill, Telephone Bill, Mobile Bill & Gas Bill, AND Rent Agreement (if rented) AND NOC for doing Business & for taking Registration.
Process for Nidhi Company Registration in India
Nidhi Company Branch Registration
- A Nidhi can open branches only if it has continuously earned net profits after tax during three financial years.
- A Nidhi can open up to three branches within the district.
- A Nidhi, which wants to open more than three branches within the district or any branch outside the district, must obtain the prior permission of the Regional Director.
- An intimation must be given to the Registrar about opening every branch within thirty days.
- A Nidhi must not open branches, collection centres, offices, or deposit centers where its registered office is situated unless financial statements and annual returns are filed with the Registrar.
Nidhi Company Compliances
Every registered Nidhi must observe all the requisitory compliance as instructed by the Companies Act and Nidhi Rules of 2014. In addition to this, the Nidhi must not commit any of the following:
- Acquire another company by purchasing securities,
- Must not open any current account with its members,
- Control the composition of the Board of Directors of any other, or
- Enter into any arrangement for the change of its management
- A Nidhi company must not carry on any business other than borrowing or lending in its name.
- A Nidhi company must not accept deposits from or lend to anyone other than its members.
- A Nidhi company must not pledge any of the assets lodged by its members as security.
- A Nidhi company must not take deposits or lend money to anybody corporate.
- A Nidhi company must not enter into any partnership arrangement in its borrowing or lending activities.
- A Nidhi company must not issue any advertisement for soliciting a deposit.
- A Nidhi company must not pay any brokerage or incentive for any of the following:
- Mobilizing deposits from members
- Deployment of funds
- Granting loans
Our Assistance in Nidhi Company Registration in India
We at Registrationwala provide end-to-end solutions for Nidhi company registration with the help of our Nidhi company registration consultant. Our services include:
- Company name research
- Obtaining DSC and DIN
- MOA and AOA drafting
- Application filing
- Following up with the Ministry of Corporate Affairs
Through Nidhi Company Incorporation, you can start your own mutual fund business. If it is what you want to do, contact Registrationwala at site:www.registrationwala.com and let us handle online Nidhi Company Registration.