Nidhi Company
A Nidhi company is a special type of company in India’s non-banking financial sector. It’s governed by the Companies Act, 2013 and Nidhi Rules, 2014. Here’s a breakdown of key features of Nidhi companies:
Purpose:
- Nidhi companies primarily promote thrift and savings habits among their members.
- They also borrow and lend money exclusively to their members for mutual benefit.
Key Characteristics:
- Member-driven: Nidhi companies can only deal with their shareholders, who are also members.
- Limited Liability: Similar to a private limited company, members’ liability is limited to the extent of their shareholding.
- Regulatory Oversight: Nidhi companies are regulated by the Ministry of Corporate Affairs (MCA).
Benefits of Nidhi Companies:
- Promotes Savings: Encourages members to develop a habit of saving through deposits.
- Access to Credit: Provides members with a source of funds for personal or business needs.
- Limited Liability Protection: Protects members’ personal assets from business debts.
- Simpler Regulations: Compared to traditional NBFCs, Nidhi companies have less stringent regulations.
Requirements for Nidhi Company Registration:
- Minimum Members: Needs to have at least 200 members within a year of incorporation.
- Net Owned Funds: Must have a minimum net owned fund of Rs. 10 lakh within a year. (Net owned funds = Equity share capital + free reserves – accumulated losses – intangible assets)
- Term Deposits: Unencumbered term deposits should be at least 10% of outstanding deposits.
- Ratio of Net Owned Funds to Deposits: The ratio shouldn’t be more than 1:20.