When it comes to the formation of a NBFC Company, Nidhi Limited registration is considered to be the easiest. Nidhi Companies get legal acceptance under the section 406 of Indian Companies Act 2013. It promotes financial activities specially, lending and borrowing money among their members.
Nidhi is a ‘Sanskrit’ word. According to the records obtained from Hindu Scriptures ‘Nidhi’ mean ‘treasure.’ In a Nidhi Company, members are encouraged to make more savings and make it habitual. This is why Nidhi Company also noted as ‘Mutual benefit Company’, ‘Mutual benefit Fund’, ‘Benefit Fund’ and ‘Permanent Fund.’
If anyone wishes to start business in the financial sector in India, they should start with the formation of Nidhi Company. Since Nidhi Company registration procedure requires less documentation and fees, this is the best that we can recommend.
Why should you Start a Nidhi Company?
Starting a Nidhi Company comes with a large numbers of benefits. You cannot enjoy the same with the formation and operating any other type of Company. Check the benefits of Nidhi Company.
• Affordable Registration Cost
It takes fewer amounts to incorporate a Nidhi Company as compared with the formation of ‘Private Limited’ or ‘Public Limited’ Company. You can get the whole process done by spending just ₹14,900/-
• No RBI License is needed
Many organizations under the NBFC section require license from the RBI (Reserve Bank of India). But Nidhi Company is exempted from such kinds of regulations. You don’t need to acquire license from the RBI to conduct businesses for your Nidhi Company. But you must follow the 2014 Nidhi Rules that has been issued by the Government of India.
• Risk of Nonpayment of Loans are less
Unlike any other type of financial services, Nidhi Companies do not face any risk regarding nonpayment of loans. Since the lenders in Nidhi Company are its members only and no outsider, the capital is quite safe.
• Endless Continuation
Nidhi Company enjoys its existence in forever mode. No matter, if some of the members quit, retire, abandon the company; it won’t alter the existence of the company. Even if the company gets bankrupted, it poses no threat to the existence of the Company.
Requirements to Start a Nidhi Company
To start a Nidhi Company you will have to comply with some minimum requirements. Check them below -
• Associates and Directors
You can start your Nidhi Company with at least 7 numbers of associates. Among these 7 associates 3 must be registered as the Director of the Company. Although there is no upper limit of members, you need to increase the membership number to 200 within one year of incorporation.
Please note that no minor or corporate body can be associates of a Nidhi Company.
• Name Declaration
All Nidhi Companies enjoy the status as a Public Limited Company, by default. So, the name of your company must be concluded with ‘Nidhi Limited’ word.
• NOF Rule
NOF is the short form used for the term “Net Owned Fund.” There must be ₹10 lakhs or more to be shown as the NOF.
• Deposit to NOF Ratio
The ratio of Deposit to NOF should be 20:1 in your Nidhi Company. That means if you are investing ₹1 in your Nidhi Company, you can increase it up to ₹20 with the deposits and not more than that.