Structured Biiz

Nidhi Limited Company

NIDHI LIMITED COMPANY

Nidhi Companies are formed in order to take deposits and lend money to its members only. Nidhi Companies are formed with the main object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit. Nidhi Company Name shall always end with “Nidhi Limited” and they need to be incorporated with a minimum equity share capital of Rs. 5 Lac.

Though the activities of a Nidhi Company are just like NBFC (taking deposits and lending money), they are allowed to deal with its members (shareholders) money only. Reserve Bank of India has granted exemption to Nidhi Companies from the core provisions of the RBI and other regulations applicable to a NBFC. Details provided herein in the Notification – https://rbidocs.rbi.org.in/rdocs/notification/PDFs/14935.PDF.

As per Section 406(1) of the Companies Act, 2013, Nidhi or “Mutual Benefit Society” means a Company which the Central Government may, by notification in the Official Gazette, declare to be a Nidhi or Mutual Benefit Society, as the case may be.

Nidhi Companies need to be compliant with Section 406 of the Companies Act, 2013 and the the Nidhi Rules, 2014 – https://www.mca.gov.in/Ministry/pdf/NCARules_Chapter26.pdf.

Limit on accepting deposits

A Nidhi shall not accept deposits exceeding 20 times of its Net Owned Funds (NOF) as per its last Audited Financial Statements. Every application form for accepting deposits from its Members must contain the information as specified in Rule 12 of the Nidhi Rules, 2014.

Duration of Deposits

Fixed Deposits

Recurring Deposits

  • Fixed Deposits shall be accepted for a minimum period of 6 Months and maximum period of 60 Months
  • Recurring Deposits shall be accepted for a minimum period of 12 Months and maximum period of 60 Months. Maximum period in case of Recurring Deposits pertaining to mortgage loans shall not exceed the repayment period of such loans granted by Nidhi.

Rate of Interest

Savings Deposits Account

Fixed & Recurring Deposits

Un-encumbered Term Deposits

  • Maximum Balance in a Savings Deposit Account qualifying for interest shall not exceed Rs. 1 Lac at any point of time and the rate of interest (ROI) shall not exceed 2% above the ROI payable on savings bank account by Nationalised Banks.
  • Nidhi Company may offer interest on Fixed and Recurring Deposits at a rate not exceeding the rate of interest prescribed by the RBI which the NBFC can pay on their public deposits.
  • Every Nidhi needs to invest and deposit in an unencumbered term deposit with a Scheduled Commercial Bank or Post office Deposits an amount not less than 10% of the deposits outstanding on the last working day of the second preceding month.

Limits on loans & rate of interest on the loan to its members

  • INR 2 Lac, where total deposits of Nidhi < INR 2 Crore;
  • INR 7.50 Lac, where total deposits of Nidhi > INR 2 Crore, but not more than INR 20 Crore;
  • INR 12 lac, where total deposits of Nidhi > INR 20 Crore, but not more than INR 50 Crore;
  • INR 15 lac, where total deposits of Nidhi > INR 50 Crore

Nidhi Companies are formed in order to take deposits and lend money to its members only. Nidhi Companies are formed with the main object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit. Nidhi Company Name shall always end with “Nidhi Limited” and they need to be incorporated with a minimum equity share capital of Rs. 5 Lac.

  • Loan shall be given to members only against gold, silver, jewellery, immovable property, fixed deposit receipts, National Savings Certificates, other Government Securities and insurance policies.
  • Rate of Interest on any loan given shall not exceed 7.5% above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing balance method. Rates of interest charged on all the products shall be prominently displayed on the notice board at the Registered Office and each branch office of Nidhi.

Nidhi Companies can have branches

  • A Nidhi may open branches upto 3 Branches within the district, only if it has earned net profits after tax continuously during the preceding 3 Financial Years;
  • If a Nidhi proposes to open more than 3 Branches within the district or any Branch outside the district, it shall obtain prior permission of the Regional Director and an intimation to ROC in this regard is required to be given within 30 days of opening of such Branch;
  • No branches or collection centres or offices or deposit centres are allowed to be opened outside the State where its Registered Office is situated;
  • No Nidhi shall open branches or collection centres or offices or deposit centres, unless financials and returns are filed up to date with the ROC.

Basic requirements of Nidhi Limited Company

Every Nidhi needs to ensure that it has

  • Not less than 200 members;
  • Net Owned Funds of INR 10 Lac or more;
  • Invested or deposited in an Unencumbered term deposits not less than 10% of the outstanding deposits;
  • Ratio of Net Owned Funds to deposits of not more than 1:20;
  • Within 90 days from the close of its first Financial Year after its incorporation, Nidhi shall file a duly certified return by a Practicing Professional in Form NDH-1 with the Registrar of Companies;
  • In case Nidhi Company is unable to have 200 members or unable to maintain required ratio of Net Owned Funds to deposits, then an application to the Regional Director is required to be made in NDH-2 for extension of time and the Regional Director may consider and pass order within 30 days of receipt of the application;
  • Nidhi Company shall not accept deposits from the second financial year, if there is a failure on the part of the Nidhi Company in complying with the above rules.

General restrictions on a Nidhi Limited Company

  • Can not carry on the business of chit fund, hire purchase, leasing finance, insurance or acquisition of securities issued by any body corporate;
  • Can not issue Preference Shares, Debentures or any other debt instruments in any form;
  • Can not open any Current Account with its members;
  • Can not acquire any Company by purchase of securities or control the composition of the Board 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 previous approval of the Regional Director having jurisdiction over such Nidhi;
  • Can not carry on any business other than the business of borrowing or lending in its own name;
  • Can not accept deposits from or lend to any person, other than its members;
  • Can not pledge any of the assets lodged by its members as security;
  • Can not enter into partnership agreement in its borrowing or lending activities;
  • Can not issue or cause to be issued any advertisement in any form for soliciting deposits (private circulation among members shall not be considered as an advertisement);
  • Can not pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans;
  • Can not admit a body corporate or trust or a minor as a member;
  • Can not declare dividend exceeding 25% or such higher amount as may be specifically approved by the Regional Director and further subject to the Nidhi Rules, 2014.

Company Formation Package

INR 34,799/-*

All inclusive

  • Company Formation with INR 10 Lac Authorised Capital;
  • 7 Class III Digital Signatures for Directors & Subscribers;
  • Director Identification Number for 3 Directors;
  • Application for the availability of name of the Company;
  • Drafting of Memorandum & Articles of Association of the Company;
  • Preparation and filing of formation documents of the Company;
  • Payment of registration fees to the Registrar of Companies;
  • Obtaining Certificate of Incorporation from the Registrar of Companies;
  • PAN and TAN of the Company
  • GST Registration (Optional)
  • Employees Provident Fund Organisation Registration (Compliances will be applicable once the Company crosses the threshold no of employee i.e., currently 20 employee)
  • Employee State Insurance Corporation Registration – (Compliances will be applicable once the Company crosses the threshold Limit – 10 employees in other states & 20 in Maharashtra)
  • Shops & Establishment Certificate Registration
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Timeline: 30-40 Days
*Inclusive of Govt. Fees on Form filing. Govt Fees is as applicable in Maharashtra. Govt Fees will vary as per the State and the Govt. Fee over and above the amount mentioned herein above shall be payable by the Client.

Request you to provide 2 Unique Names of the Company. In case the name approval is not granted in the first instance, Govt Fee of Rs. 1,000/- and Our Fee of Rs. 999 shall be charged separately for re-application of name.

Post Formation Compliance Package

INR 30,999/-*

Inclusive of GST

  • Preparation of documents for opening a Current Account;
  • Filing of Certificate of Commencement of Business;
  • Appointment of First Auditor & filing of document in regard to the same;
  • Obtaining Statutory Declaration from 3 Directors;
  • Filing of DIR-KYC of 3 Directors;
  • Preparation of Statutory Registers;
  • Preparation of First Minutes of the Board Meeting;
  • Dematerialisation of Equity Shares (Compulsory for Public Limited Company);
  • Post Formation Compliance Guidance!!
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*Excluding Govt. fee and reimbursements, if any. However, any Penalty levied due to delayed filing to be borne by the Company. Dematerialisation Fee Charged By RTA And Depository Shall Be Charged Separately.