Nidhi Company Registration
Nidhi Company is a type of Non-Banking Financial Company (NBFC). It is formed to borrow and lend money to its members. It inculcates the habit of saving among its members and works on the principle of mutual benefit. Nidhi Company isn’t required to receive the license from Reserve Bank of India (RBI), hence it is easy to form.
What is Nidhi Company?
A Nidhi Company is a company that primarily deals with managing deposits from and providing loans to its members, who are also shareholders. The main purpose of a Nidhi Company is to promote thrift and savings among its members while offering financial assistance through lending.
Nidhi Companies in India have specific exemptions and relaxed regulations when it comes to their annual compliance requirements and tax assessments, making them a unique financial institution designed to benefit their members mutually.
The legal framework governing Nidhi Companies in India consists of Section 406 of the Companies Act, 2013, the Companies (Nidhi Companies) Rules of 2014, and Chapter XXVI of the Companies Rules, 2014.
Nidhi Companies in India have specific exemptions and relaxed regulations when it comes to their annual compliance requirements and tax assessments, making them a unique financial institution designed to benefit their members mutually.
The legal framework governing Nidhi Companies in India consists of Section 406 of the Companies Act, 2013, the Companies (Nidhi Companies) Rules of 2014, and Chapter XXVI of the Companies Rules, 2014.
Benefits of Nidhi Company
Registering a company as a Nidhi in India offers a range of advantages that extend beyond the primary objective of fostering savings among members. Here are key points emphasizing what is Nidhi company benefits:
- Easy Formation:
Nidhi Companies boast a straightforward and hassle-free formation process with minimal requirements, making it accessible for those looking to establish such entities. - Non-Compliance with RBI:
Nidhi Companies are not bound by the Reserve Bank of India (RBI) guidelines, allowing them to set their own operational rules and regulations. - Lower Risk:
Transactions involving lending, borrowing, or depositing are carried out by members of the Nidhi Company, reducing financial risks and ensuring a sense of security within the community. - Economic Registration:
The registration process for a Nidhi Company is cost-effective when compared to other Non-Banking Financial Company (NBFC) registration procedures, which facilitates easier access to business loans and financing options. - Savings Promotion:
Nidhi Companies play a pivotal role in promoting a culture of saving among the Indian population, thereby contributing to financial prudence. - Net-Owned Funding System:
Nidhi Companies typically adopt a cost-effective net-owned funding system, which can enhance their business growth prospects by efficiently utilizing their own resources and funds.
Documents Required for Nidhi Company Registration in India
To register a Nidhi Company in India, you need to provide the following essential documents:
- Directors Identification Number (DIN)
- PAN Number (Permanent Account Number)
- Residential proof and address proof
- Photographs of the proposed directors and members
- Identification documents like Aadhar card
- Proof of the registered business place, such as a rent agreement or lease
- Ownership proof of the business place
- NOC (No Objection Certificate) if required
- Memorandum of Association (MOA)
- Articles of Association (AOA)
