How you can do Nidhi company registration in India?

Posted by Enterslice India on January 18th, 2019

Nidhi company is one of the categories of Non-banking financial company which does not require any license of Reserve Bank of India.  Nidhi Company works through its members. Nidhi company accepts deposit and lends loans to its members only. In this blog, we discuss features, advantages, registration and all other necessary aspects of Nidhi Company.

What is the Meaning of Nidhi?

As per section 406 of the Companies Act,2013, Nidhi means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members. Nidhi company receives the deposit and gives a loan to its members for their mutual benefit.  Nidhi company is also called as Mutual Benefit Company. Nidhi company can be considered as a small and legal way to start the finance business in India.

Features of Nidhi Company.

List of features of Nidhi company is listed below:

1) Nidhi company promotes small savings middle and lower middle class.

2) Nidhi company accepts the term deposit for timely returns.

3) It cannot issue preferential shares

4) It is an easy source of a loan to members against collateral

5) Starting a Nidhi company is beneficial for long term gains due to the nature of investment and procedures.

What are the requirements for Nidhi Company?

There are certain requirements for starting and creating a Nidhi Company. List of the requirements need for Nidhi Company is given below:

1) A Nidhi company has to be a public company.

2) It must have a minimum paid up equity share capital of Rs 5,00,000

3) Non-issuance of preference shares

4) The name of the company must have Nidhi Limited.

Benefits of Nidhi Company

List of the benefits of Nidhi company is listed below:

1) No outsider intervention:- Nidhi companies are formed, managed and provide details to their members only. The outsider is not allowed to intervene in the working of the Nidhis. Outsider is not allowed to deposit money or avail credit from Nidhi Companies.

2)  Limited RBI regulations:- Regulations imposed on Nidhi's by Reserve Bank of India is limited. Nidhi companies follow the Nidhi Rules, 2014 issued by the center in respect of the activities and working.

3)  Easy formation:- It is very easy to form a Nidhi company. Nidhi Companies are not required to obtain a license from RBI. Nidhi companies just have to incorporate themselves as a public company with the Ministry of Corporate Affairs.

4) Limited capital requirement:- Ministry of Corporate Affairs mandates the minimum capital requirement of     Rs 5 Lakhs for Nidhis. After Nidhi Rules, 2014 came into force it mandated the capital requirement of Rs 10 lakhs for Nidhi Companies.

5) Lower Rate of interest :- Loans at a very lower rate of interest are given to the members of a Nidhi company.

Procedure for Nidhi company registration

To register a Nidhi company certain steps are required to be fulfilled. Necessary steps for Nidhi company registration is given below:

1) Application of Digital Signature Certificate and Designated partner identification number:- To register a Nidhi Company all the partners have to apply for Designated partner identification number and  Digital Signature Certificate. If all the directors already have their Designated partner identification number and Digital Signature Certificate, then they can skip this step.

2) Name of approval:- Person and company who needs to register for a Nidhi Company have to submit three option for the name of Nidhi Company to the Ministry of Corporate Affairs and out of three, one will be selected. The names provided should be completely unique.

3) Submission of Memorandum of Understanding and Articles of Association:- After the name approval, one has to submit Memorandum of Understanding and Articles of Association. Both Memorandum of Understanding and Articles of Association needs to be filed with the Ministry of Corporate Affairs.

4) Incorporation Certificate:- Once registration application is filed, then Person and company will receive an Application reference number. The Incorporation certificate is received within 15-20 days. It is proof that the company has been incorporated.

5) Apply for PAN, TAN, Bank Account:- The last step is to apply for PAN, Tax deduction and Collection account number (TAN) and bank account. PAN and TAN are issued within 7-10 working days. After receiving of PAN and TAN, one can submit the incorporation certificate, Memorandum of Understanding, Articles of Association and PAN with the bank to open a bank account.

Documents required for Nidhi company registration

List of the documents required for Nidhi Company registration is given below:

1) Copy of Director's PAN card.

2) Passport size photograph of directors

3) Copy of aadhar card/Identity of directors

4) Copy of rent agreement (If the property is rented one)

5) Electricity/Water bill

6) Copy of property Papers

7) No objection certificate of the landlord, if any

Source url - http://corpbiz.fikket.com/event/how-you-can-do-nidhi-company-registration-in-india

Like it? Share it!


Enterslice India

About the Author

Enterslice India
Joined: December 4th, 2018
Articles Posted: 19

More by this author