“Nidhi” is a Hindi word, which means finance or fund. Nidhi Company Registration is done with an intention to cultivate savings among members and to provide finance among members only. It is allowed to take loans from members and can lend to only members. Hence, it can not accept deposits or lend from/to non-members.
Though there are no separate registrations to be done under RBI for a Nidhi company, RBI is empowered to issue any directives to them. Nidhi Companies are as such exempted from main provisions otherwise applicable to an NBFC in India. It requires minimum 7 members and 3 directors to start with. As a part of suffix, all such companies must append “Nidhi Limited” after its name. Nidhi Company is very easy to form and there are minimum compliances afterward. You may visit here to know all about loans that Nidhi company can offer and interest rates that it can charge.
A Nidhi Limited Company can undertake any type of business activity that an Indian person can undertake across most sectors and industries. However, there are some activities like banking, insurance, financial services, lending, defence, telecommunication that require specialized approval. In such cases, a company is mandatorily required to obtain various approvals from the Government. Hence, Nidhi Limited Company business structure only works for business activities that are company scale in nature.
A Nidhi Limited Company Enjoys the benefit of Separate Legal Identity in the eyes of law which clearly states that assets and liabilities of the business are not the assets and liabilities of the Directors.
A Nidhi Limited Company Encourages its members to save money and encourages a thrifty lifestyle. It is a company wherein members can lend or borrow money and accept financial loans amongst themselves.
Interest in Nidhi Limited Company can be easily transferred by transferring its shares. Its board of management is easily transferable as such.This is effected through filing of forms with ROC.
Members, when in need, can borrow from the company at bank rates. This can really come handy in case of need and rates are comparatively very cheap in comparison to other sources of finance.
A Nidhi Limited Company operates on principles of mutual benefits. No one member or a group of members get benefited. Nidhi Company allows right to every member to access credit facilities when in need.
All the information relating to the company are made available in a public database. This feature makes it easy to authenticate the existence of the business that ultimately helps in improving business credibility.
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