The Nidhi Company is a type of NBFC (Non-Banking Financial Company) which is regulated and governed by the provisions of the Companies Act 2013. The significant feature that differentiates this company from other companies is that this business structure deals with the deposits from and loans to its members, i.e., shareholders only, and works just for the mutual benefits of its members.
Further, it shall be noteworthy to take into consideration that the activities of this business structure do fall under the ambit of Reserve Bank of India (RBI), as it is similar to that of an NBFC. However, RBI has excused the Nidhi Company from the core provisions of the RBI Act, 1934 and other regulations prevalent on an NBFC, as these Companies deals onlywith the money of its shareholders or members.
No External involvements in the company’s management. Easy to lend money to or raise capital or borrowings from group members. Easy to manage. Relaxation in number of compliance compared to other company structures. Many privileges and exemptions are provided under the provisions of the Companies Act 2013. The minimal involvements of Reserve Bank of India
Secured investment with lower rate of interest; Nidhi company rules is the only regulatory body; Better substitute for a Credit Co-Operative Society; Enjoys the status of a separate legal entity; Fulfilling the financial requirements of lower and middle income groups; Limited liability to its partners in case of any loss.
dentification plays an important role in making a business outstand in competitive market, build an unique and distinctive name for your business hence enhance your brand’s trust and value. Consumers should identify activity of your business from the brand name so that they can relate your business with its offerings.
Even though it meets all the above criteria, once again make sure that the brand name to be short, easy to remember and simple to pronounce or spell.
The name of a registered Nidhi Company must end with Nidhi Ltd, Nidhi Limited etc.
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Your Nidhi Company is incorporated.
Must have at least 200 members/shareholders.
Minimum Net Owned Fund (NOF) of ₹10 lakh.
Unencumbered term deposit of at least 10% of total deposits.
Ratio of NOF to term deposits must not be less than 1:20.
Operates solely for its members with no external interference.
Provides loans at low interest with minimal documentation.
Offers secured investments for members.
Yes. Deposits are protected under regulations by the Ministry of Corporate Affairs (MCA) and Reserve Bank of India (RBI), and Nidhi Companies must comply with these rules.
Funds are used to lend small loans to shareholders/member as per Nidhi rules.
Any person aged 18 or above with valid ID and address proof can become a member.
No, minors cannot be admitted as members. However, deposits can be accepted in the name of a minor if made by their guardian who is a member.
Loans require security such as gold, silver, or other financial securities against the loan.
Cannot engage in chit funds, insurance, hire purchase or leasing finance, or acquisition of company shares.
Cannot issue debentures or preference shares.
Prohibited from maintaining current accounts with members, entering partnerships for lending/borrowing, or acquiring other companies.
No. Loans are strictly limited to members only.
No, Nidhi Companies are restricted from engaging in those activities.
It must have at least 200 members within one year of incorporation.
No. Directors must be shareholders; holding shares is mandatory.
A director may serve up to ten consecutive years and is only eligible for reappointment after a two-year gap following their term.
Equity shares must be of at least ₹10 each.
Each deposit holder must be allotted at least 10 equity shares or shares worth ₹100.
Deposits accepted cannot exceed twenty times the Net Owned Funds as per the latest audited financials.
The maximum is 25%, unless a higher rate is approved in writing by the Regional Director.
