Nidhi Company Registration

A nidhi company's primary business activity is to borrow and lend money to its members. A nidhi corporation can accept deposits and make loans to its members. The procedure for getting nidhi registration is child’s play, and it does not require any RBI clearance for that type of company registration in India.

The Nidhi company usually bestows funds for its members only. These companies are small in collation with the banking sector and are primarily used to instil savings within the workers. To inculcate the practice of saving among its members, Nidhi company came into devise.  

Nidhi registration is potent for almost all the companies so by nidhi bank registration your company can help employees to get loan and money.  

Restriction on the Nidhi Registration: 

The following are some of the limits imposed on a Nidhi Company under the Nidhi Rules, 2014. According to Rule 6 of the Nidhi Rules, 2014, a Nidhi Company shall NOT:

• Carry on chit fund, hire purchase finance, leasing finance, insurance, or the acquisition of securities issued by any body corporate;

• Issue preference shares, debentures, or any other type of financial instrument under any name or in any form;

• Open a current account with any of its members

• Acquire another company through the purchase of securities, or control the composition of the Board of Directors of any other company in any way, or enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the prior approval of the Regional Director having jurisdiction over such Nidhi;

• Carry on any business other than borrowing or lending in its own name: Provided, however, that Nidhis that have complied with all of the provisions of these rules may provide locker facilities on rent to its members, subject to the rental income from such facilities not exceeding 20% of the Nidhi's gross income at any point in time during the year.

• Accept deposits or make loans to anyone other than its members;

• Pledge any of its members' assets as collateral;

• Accept deposits from or lend money to any corporate entity; participate under any partnership agreement in its borrowing or lending operations

• Issue or cause to be issued any advertisement in any form soliciting deposits: Provided, however, that private circulation of details of fixed deposit Schemes among Nidhi registration bearing the wording "for private circulation to members only" shall not be regarded as an advertisement soliciting deposits.

• Pay any brokerage or reward for mobilising member deposits, deploying funds, or issuing loans.

Nidhi Company Registration: 

To commence a nidhi company the first step is to subsume a limited company, under the company act 2013. Therefore they need three directors and seven shareholders to commence the limited company incorporation process. Caution is advised during the incorporation of the Nidhi registration to ensure that the object of the Limited Company mentioned in the Memorandum of Association is cultivating the habit of thrift and savings among its members, receiving deposits from, and lending to its members only, for their mutual benefit.

Following the creation of the Limited Company, the nidhi limited registration must achieve all of the following criteria within one year of its inception:

• Not have fewer than 200 members (shareholders);

• Have Net Owned Funds (NOF) of ten lakh rupees or more; have unencumbered term deposits equal to at least 10% of outstanding deposits;

• Have a Net Owned Funds to deposits ratio of not more than 1:20.

"Net Owned Funds" refers to the sum of paid-up equity share capital and free reserves less accrued losses and intangible assets as shown on the most recent audited balance sheet.

If the Nidhi Company meets the above conditions for operating as a Nidhi Company, the company must file a return of statutory compliances in Form NDH-1, duly certified by a practising CA/CS/CWA, along with the requisite fees, within ninety days of the close of the first financial year after its incorporation and, where applicable, the second financial year. If the Nidhi Company meets the aforementioned standards for operating as a Nidhi Company, the company shall, within ninety days from the date of registration

Frequently Asked Question: 

What is the definition of a Digital Signature Certificate?

A Digital Signature electronically establishes the identity of the sender or signee while filing documents over the Internet. The Ministry of Corporate Affairs (MCA) requires that the Directors use their Digital Signature to sign some of the application materials.

What documents are needed for Nidhi Company registration?

Identity and address proof are required for all proposed Nidhi Company Directors. For Indians, a PAN card is required. Furthermore, the landlord of the registered office premises must present a No Objection Certificate for having the registered office in his/her premises, as well as identity and address verification.

How long does it take to form a Nidhi Company?

For 20-30 days, lawgicalindia can incorporate a Nidhi Company. The time it takes to register will be determined by the client's submission of required paperwork and the speed with which government approvals are obtained. Please choose a unique name for your Company and make sure you have all of the essential paperwork before beginning the registration process.