A nidhi company, is one that belongs to the non-banking Indian finance sector and
is recognized under section 406 of the Companies Act, 2013. Their core business
is borrowing and lending money between their members. They are also known as Permanent
Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company. They are regulated
by Ministry of Corporate Affairs. Reserve Bank of India is empowered to issue directions
to them in matters relating to their deposit acceptance activities. However, in
recognition of the fact that these companies deal with their shareholder-members
Nidhi companies existed even prior to the existence of companies Act 1913. The basic concept of nidhi is "Principle of Mutuality" ("Paraspara Sahayata"). Thus they function for the common benefit advantage of all their members/share holders.
Nidhi companies is governed by Nidhi Rules, 2014. They are incorporated in the nature of Public Limited company and hence, they have to comply with two set of norms, one of Public limited company as per Companies Act, 2013 and another is for Nidhi rules, 2014. No RBI approval is necessary to register the company, as RBI has specifically exempted this category of NBFC in India to comply with its core provisions such as registration with RBI etc. Every Nidhi shall, within a period of one year from the commencement must ensure that it has not less than 200 members.
Acceptance of deposits is the only reason why Nidhi Company is created by any person, so the rule 11 and 13 automatically becomes the most important rules of Nidhi Rules, 2014. Nidhi Company can accept deposits and teram deposits like bank/NBFC and can offer a lucrative interest to attract the rational investor/member. However unlike Bank and NBFC, Nidhi Company is not allowed to accept funds for more than 5 year (60 Months). Further, these rules should be followed properly to avoid any hindrance in the business due to any legal case. More Details...
The Nidhi Company is very easy and cheap to form to register. Anybody can register a Nidhi Company and there is no any prescribed qualifications for its owners. To start a Nidhi Company first need to Incorporate a Limited Company, under the Companies Act 2013. The MOA (Memorandum of Association) of a Nidhi company must state that the primary objective of the proposed company is to nurture and promote a habit of thrift and savings among its members, and accept deposits from or lend loans only to its members, for the mutual benefits of them. More Details...
A nidhi company, is one that belongs to the non-banking Indian finance sector and is recognized under section 406 of the Companies Act, 2013 and Companies (Nidhi Companies) Rules, 2014. They are also known as Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company. They are regulated by Ministry of Corporate Affairs.More Details...