Currently the Reserve Bank of India is putting more restrictions on the NBFC Companies, Investment Companies therefore the Promoters moving towards the incorporating a Nidhi Company. The benefit to incorporate a Nidhi Company, it does not require any licence from Reserve Bank of India to carry the business.
Nidhi Company is governed by the Section 406 of the Companies Act, 2013 and Chapter XXVI of Nidhi Rules, 2014. It is one of the types of Non Banking Financial Company (NBFC). The main object to formulate the Nidhi Company cultivating the habit of thrift and savings amongst its members, receiving deposits from and lending to its members only for their mutual benefits.
1. It shall be a Public Limited Company
2. Proposed Name of the Nidhi Company
3. Minimum 7 (Seven) members are required to start a Nidhi Company out of which 3 (Three) must be the Directors of the company.
4. Minimum Capital requirement Rs. 5 Lakh
5. The Nidhi Company cannot issue the Preference Shares.
6. Registered Office Address
7. Body Corporate or Trust cannot be the Member of the Nidhi Company
8. A minor shall not be admitted as a member
The Nidhi Company within One year ensure that:
1. The Number of Members should not be less than 200.
2. Net Owned Fund should be Rs. 10 Lakh or more.
3. Unencumbered term deposits of not less than 10% of the outstanding deposits.
4. Ratio of Net Owned Funds to deposits of not more than 1:20.
The Nidhi Company shall not:
1. Carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
2. Issue preference shares, debentures or any other debt instrument
3. Open any current account with its members
4. Acquire another company by purchase of securities or control the composition of the Board of Directors of any other company
5. Carry on any business other than the business of borrowing or lending in its own name
6. Accept deposits from or lend to any person, other than its members;
7. Pledge any of the assets lodged by its members as security;
8. Take deposits from or lend money to any body corporate;
9. Enter into any partnership arrangement in its borrowing or lending activities;
10. Issue or cause to be issued any advertisement in any form for soliciting deposit:
11. Pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans.
1. PAN Card of all the Members
2. Identity Proof i.e Voter ID Card/ Passport / Aadhar Card
3. Address Proof i.e. Electricity Bill/ Telephone Bill / Mobile Bill
4. Digital Signatures
5. Director Identification Numbers
6. Address Proof for the Registered Office Address
RBI has exempted Nidhi Companies from the core provisions and also it does not have any specific framework. The Ministry of Corporate Affairs also give exemption vide notification date 05th June 2015. Therefore, with a small funding the normal businessman can start the Nidhi Company.
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