Nidhi Company is a type of Non-Banking Financial Company (NBFC). It is formed to borrow and lend money to its members. It inculcates the habit of savings among its members and works on the principle of mutual benefit.
Nidhi Companies are registered Limited Companies involved in taking deposits and lending to their members. The activities of a Nidhi Company do fall under the purview of Reserve Bank of India, as it is similar to an NBFC. However, as Nidhi Companies ONLY deal with its shareholder-members money, RBI has exempted Nidhi Companies from the core provisions of the RBI and other regulations applicable to an NBFC.
To start a Nidhi Company in India, the first step is to incorporate a Limited Company, under the Companies Act, 2013. Hence, a minimum of three Directors, seven shareholders and 5 lakh rupees will be required to start the Limited Company incorporation process. During incorporation of the Nidhi company, care must be taken to ensure that the object of the Limited Company mentioned in the Memorandum of Association is that of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.
Post incorporation of the Limited Company, within a period of one year from the commencement, the Nidhi Company must meet all of the following criteria:
1. Not have less than two hundred members (shareholders);
2. Have Net Owned Funds (NOF) of ten lakh rupees or more;
3. Have unencumbered term deposits of not less than ten percent of the outstanding deposits; and
4. Have a ratio of Net Owned Funds to deposits of not more than 1:20.
Nidhi Company can’t deal with chit funds, hire-purchase finance, leasing finance, insurance or securities business. It is strictly prohibited from accepting deposits from or lending funds to, any other person except members. Also, it can’t advertise itself to ask for any deposits.
Documents required:1. Proof of the registered place of business (Ownership documents/ rent or lease agreement)
2. No Objection Certificate (signed by the owner/ landlord)
3. Voter I'd/ Aadhaar
4. Address proofs of the members
5. Passport size photograph
6. PAN Card
7. Digital Signature (DSC)
8. Director Identification Number (DIN)
9. Memorandum of Association (MOA)
10. Articles of Association (AOA)
For more information, please visit
http://www.mca.gov.in/MinistryV2/nidhicompanies.htmlFor trust registration, please click
https://allroundtaxsolutions.com/trust-registration/