Nidhi is a Hindi word, which means finance or fund. Nidhi Company is one of the categories of Non-Banking Financial Company (NBFC) that does not require any Reserve Bank license. The Nidhi Company is very easy and cheap to form to register. Hence, this is the main reason as to why the Nidhi Company is so famous between the business communities
The main thrust to register Nidhi Company in India is to promote the saving habits among its members for their mutual benefits.
Nidhi Company has following features:
- Public Company: It has to be registered as a public company.
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- Capital: Minimum paid up equity share capital shall be of Rs. 5 Lakh.
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- Object: Nidhi shall have object of promoting the habit savings amongst its members in its MOA.
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- Minimum Members: It must not have less than 200 members.
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Why Nidhi Company:
- If you want to start your business in financing industries, then it is the best vehicle to kick start your plan.
- Though Nidhi Company comes under the broad category of NBFCs (Non-banking Financial Companies), yet it is exempted from stringent regulatory compliances, which otherwise you have to follow if you start NBFCs.
- It is beneficial to raise money within tightly-knit groups.
- Since Nidhi company gives a loan to its members, only if members provide some sort securities such as Gold, silver, jewellery, properties or any type of financial securities e.g. FD receipts, National Saving Certificates (NSCs) etc., so this mechanism protects the risk if some members fail to pay back money borrowed.
Documents required to incorporate Nidhi Companies 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 Proof like Driving License, Passport, Voter ID &Adhaar Card
- Self attested copy of any one of the Address 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.
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Minimum Requirement before Incorporation
1. Minimum 7 shareholders
2. Minimum 3 Directors
3. Minimum capital of 10 lacs
4. DIN of all Directors
Maximum Requirement after Incorporation
1. Minimum number of 200 shareholders
2. Net owned fund shall not be less than Rs.10 Lacs
3. Unencumbered deposit of not less than 10% of the outstanding deposits
4. Net owned funds to deposits ratio should be more than 1:20
Every Nidhi Company shall have the above requirement after one year of its incorporation. If the company fails to fulfil the requirements, then such company is prohibited from accepting any more financial deposit.
