Nidhi Company is a one of the category of non-banking financial company structure that performs the functions of lending and borrowing of money within its members. The word Nidhi in the Indian context means “Treasure or Money”. Before registering a Nidhi Company it is important for you to understand certain important facts about it.
NIDHI COMPANY MEANING :
- A Nidhi company is a Public Limited Company registered under Companies Act 2013
- Nidhi Company is one of the category of Non-Banking Financial Company (NBFC) which does not require any License from Reserve Bank of India (RBI) and Compliances of NBFC
- A Nidhi can accept deposit and lend money to its members only, so prerequisite before dealing in Nidhi is to become of member of Nidhi
- Nidhi is also known as Mutual Benefit Company
NIDHI COMPANY NAME REQUIREMENT :
- Every Company incorporated as a “Nidhi” shall have the last words ‘Nidhi Limited’ as part of its name.
- The proposed names should not include the word Bank, Money, Finance, Capital etc
MINIMUM REQUIREMENTS FOR NIDHI COMPANY :
- CAPITAL REQUIREMENTS :
Nidhi company should have following Capital requirement :
INITIAL CAPITAL : 5 LAKH
INCREASED CAPITAL : 10 LAKH (Within 1 Year of Incorporation)
- MEMBERS REQUIREMENTS :
Nidhi company should have following Capital requirement :
INITIAL MEMBERS : 7 Members
INCREASED MEMBERS : 200 Members (Within 1 Year of Incorporation)
- Minimum Number of Directors in the company : 3 Director
- Ratio of Net Owned Funds to deposits of not more than 1:20.
- Unencumbered term deposits of not less than ten per cent of the outstanding deposits as specified in rule 14 Nidhi Company.
ACTIVITIES TO BE CARRIED OUT BY NIDHI COMPANY :
- Accept deposit from Members in form of Savings and Fixed Deposit
- Granting of Secured loan only to its members against gold, silver and jewellery, immovable property, fixed deposit receipts, National Savings Certificates, Government Securities and insurance policies
- Provide locker facilities on rent to its members.
ACTIVITIES NOT PERMITTED BY NIDHI COMPANY :
- Cannot carry on business of Chit Fund, Hire purchase Finance, Leasing Finance, Insurance or acquisition of securities issued by any body corporate.
- Open any current account with its members.
- Acquire another company by purchase of securities or control the composition of the Board of Directors.
- Accept deposits from or lend to any person, other than its members;
- Carry on any business other than the business of borrowing or lending in its own name.
- Pledge any of the assets lodged by its members as security
- Issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever
- Pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans
- enter into any partnership arrangement in its borrowing or lending activities;
- Issue or cause to be issued any advertisement in any form for soliciting deposit (except for members)
- pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans.
- Micro-Financing Activities
IMPORTANT ASPECTS IN FUNCTIONING OF NIDHI COMPANY :
- MINIMUM AMOUNT OF SHARE TO BE GIVEN TO MEMBERS :
New Members (except Deposit Holders) : Rs. 10/-
New members (For Deposit Holder) : Rs. 100/-
- RATE OF INTEREST ON DEPOSITS :
The interest rate on saving deposit shall never exceed 2% above the rate offered by the nationalized bank.
The interest rate on fixed and recurring deposit shall not exceed maximum rate of interest prescribed by the Reserve Bank of India for NBFC
- AMOUNT AND TENURE OF DEPOSITS :
The maximum balance in a savings deposit account at any given time qualifying for interest shall not exceed one lakh rupees at any point.
The amount of fixed deposit can be accepted for minimum 6 and maximum 60 Months while the recurring deposits can be accepted for minimum 12 month and maximum 60 months
A Nidhi shall not accept deposits exceeding 20 times of its Net Owned Funds (NOF) as per its last audited financial statements.
- MAXIMUM AMOUNT OF LOAN PERMITTED :
|TOTAL DEPOSITS ACCEPTED FROM MEMBERS||LOAN AMOUNT TO A MEMBER|
|Less than Rs. 2 Crore||Rs. 2,00,000|
|More than Rs. 2 Crore but Less than Rs. 20 Crore||Rs. 7,50,000|
|More than Rs. 20.00 Crore but Less than Rs. 50 Crore||Rs. 12,00,000|
|More than Rs. 50 Crore||Rs. 15,00,000|
- MAXIMUM RATE OF INTEREST OF LOAN :
The rate of interest to be charged on any loan given by a Nidhi shall not exceed seven and half per cent above the highest rate of interest offered on deposits by Nidhi Company and shall be calculated on reducing balance method
COMPLIANCE FOR NIDHI :
The Annual Compliance applicable for Nidhi are as follows :
- FORM NDH – 1 : Nidhi Company is required to File NDH-1 with prescribed Fes and Form certified by CA/CS/CMA within 90 days from the end of first financial year. (where applicable, the second financial year)
COMPLIANCE OF FOLLOWING MATTERS HAS TO BE DONE BEFORE FILING OF NDH 1
- To ensure 200 members in a financial year
- To maintain the Net owned funds to deposit ratio of 1:20.
- FORM NDH – 2 : Nidhi Company, if required has to file form NDH-2 along with the prescribed fees with the regional director for an Extension of time in case of non-compliance of points mentioned in NDH-1
- FORM NDH – 3 : Nidhi Company is required to File NDH-3 Half Yearly Return with prescribed Fes and Form certified by CA/CS/CMA within 30 days from the conclusion of each half year.
- EFORM AOC-4 : Form AOC 4 is used to file the financial statements for each financial year with the Registrar of Companies (ROC) The Form has to be filed within a period of 30 days from the date of Annual General Meeting of the company
- EFORM MGT-7 : Form MGT-7 is a used by companies to file their annual return details for each financial year with the Registrar of Companies (ROC). The Form has to be filed within a period of 60 days from the date of Annual General Meeting of the company.
- INC 20A : After incorporation, a Declaration is filed by director that every shareholder (member) of the company has paid the value of shares (paid-up capital) agreed to be taken by him/her during incorporation within a period of 180 days from the date of incorporation.
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