Nidhi Company Registration – An Overview

Nidhi Company is the blessing in disguise for those people who are interested in beginning the loan/finance business in India as it ensures ease and affordability factor as well.

Nidhi Company Registration is a procedure through which the incorporation of type of NBFC called Nidhi can be made possible. Another name of this NBFC is the Mutual Benefit Finance Company. Furthermore, this incorporation takes place under the provisions of Companies Act, 2013.

The business of Nidhi Company is concerned with the acceptance of deposits and lending of money. As compared to the registration processes of other NBFCs, This registration process is an easy one. In respect of taxation and annual compliances, Nidhi companies enjoy the benefit of specific exemptions. Nidhi Company incorporation will invigorate the feeling of savings as well as smart spending in the mind of its members.

Widely known as Nidhi Bank, Nidhi companies endeavors to cultivate the values of thrift amongst their members. Rules related to Nidhi Company suggest that it can proceed further for the transactions within restricted boundaries of work and only with its registered members.

Moreover, its not wrong to say that these companies acquire from their members and confer to their members. Nidhi company activities come under the ambit of RBI. In this category of NBFC, Directors are free from the shackles of eligibility norms of least qualification. At the end of the name of all the Nidhi Companies, Nidhi Ltd. must be there at any cost.

Key Points Circumscribing Nidhi Company Registration

• All the provisions related to governance and establishment of Nidhi companies in the geographical boundaries of India come to light in Section 406 of the Companies Act 2013 and also in the Nidhi companies rules of 2014.
• As Nidhi Companies indulges in the trade of lending money and accepting of deposits by nobody else but by their members only, RBI has provided them with many exemptions.
• RBI is responsible for issuing the directives and guidelines for the Nidhi Companies. Primarily, these are concerned with investments and most of the financial activities by companies. (Also comprising the NBFCs)
• In the case of Nidhis, deposits earn shallow interest in comparison to deposits in the systematic sector of banking.
• As Nidhi Companies are helping all the members by doing their utmost for their mutual benefit along with their welfare, these companies have earned the tag of Mutual Benefit Societies. All the members of Nidhi Companies participate in all the lending and borrowing activities.

Nidhi Company Registration Process

Even though the Nidhi Company Registration process is quite simple to follow, you must take help from the professionals which may make even the complex of things straightforward. The completion and filing of complex forms become comfortable with the help and advice of professionals. Also, it would be a time-saving exercise with their support. Sometimes, the government portal and a bit difficult language make things challenging. After gaining expertise in Nidhi Company Registration, we have successfully started many Nidhi Companies under our roof. The Nidhi Company incorporation procedure involves many items submission, which are as follows:-

Forms to be filled

INC 9 – To be filed by all the subscribers to MoA

DIR 2 – To be filed by all the directors of the company also to be signed by all the subscribers, deceleration as per rule 5 & 6 of Nidhi rules 2014 –

• Directors and Members - Begin with KYC Part

  All the shareholders and directors must undergo the KYC process. At least there should be three directors along with the seven members. An individual can be the director, as well as a member. Both can be the same.

• The Need for Digital Signature Certificate

  Nidhi Company Registration Process gathers speed when there is a fulfillment of the primary requirement i.e., digital signature. Also, its mandatory to get all the submitted forms self-attested.

• Consent on Name

  Now, the first requirement is to select and suggest at least three names to proceed further in the Nidhi Company Registration Process. MCA is all set to reject two names and will give its nod to one name only. Another factor that requires consideration is the uniqueness of the proposed names. Also, they should not resemble the names of registered companies in the past. SPICE + web based form will help in reserving the name.

• Articles of Association and Memorandum of Association(Final Incorporation)

  After finishing up the process of name approval, Nidhi Company Registration Application gets submitted along with the Articles of Association and Memorandum of Association, respectively, of Nidhis company. Before COI issuance, an inspection of the application takes place in an orderly manner. And finally, COI is issued.

• PAN and TAN & Opening of Your Bank Account

  You are likely to receive your PAN and TAN within a week. And hereafter, submits the Memorandum of Association, Articles of Association, Certificate of Incorporation, and PAN to the bank, and eventually, you will get your bank account opened.

• RBI Guidelines on Nidhi Companies

  The RBI is authorized to issue directions since a Nidhi company falls under one class of Non-Banking Financial Companies in relation to deposit acceptance activities. Nonetheless, exemption has been provided by RBI from the grounded provisions of the RBI Act and other directions as are applicable to NBFCs since the Nidhi Company transacts with its shareholder-members only.

Benefits of Establishing a Nidhi Company

Many people in our country want to deal with financial services, but due to the scarcity of capital, they are unable to take further steps. The principal objective of forming a Nidhi Company is to nurture the belt-tightening habits amongst its members so that by prioritizing saving, they won't face any difficulty in meeting their financial requirements that keep on arising from time to time. Apart from this, many unexplored benefits of establishing a Nidhi Company exists.

Reasons, why people prefer Nidhi Companies, are listed down as

• Easy Formation without any Complexity Involved

  The registration process of Nidhi Company relishes freedom from all kinds of complexities. As less documentation process prevails from the beginning to end in Nidhi Company Registration, Initiating a Nidhi Company is an easy task. In addition to this, the registration process gets completed within one or two weeks.

• Limited Liability

  In accordance with the Companies Act, 2013, directors and shareholders are having limited liability. In the game of business, either there will be profit or the company have to incur losses. While performing the business activities, if the company suffers from any loss or even goes through any financial trauma, creditors, banks, and the government have no power to seize the personal assets of any of the shareholders or even the directors.

• High Certainty Value

  In a developing nation like India, From 8 years old child to 60 Years older adult is interested in saving their money. Here, the habit of saving is going in the same line with the central goal of Nidhi Company. Inculcating the habit of saving amongst its members is one of the primary purposes of Nidhi Companies. As it is a going concern of establishment and is full of certainty, members would keep on sticking to the good habit of saving.

• Few Guidelines

  Being governed under the Nidhi Rules, 2014, Nidhi Companies have to follow fewer guidelines imposed by RBI. The monitoring and regulating hat remain in the hand of the Central Government. It empowers them to control the operating part along with all their activities. Even though Nidhi Company falls under the category of NBFC, it rarely follows RBI Regulations. You can definitely form your Nidhi Company in India as RBI is not going to create any trouble in your path. Go ahead without putting yourself in any rush-n-hush.

• Separate Legal Entity

  Being a separate legal entity from its shareholders, directors as well as promoters, Nidhi Company can own property and incur debts on its name. It has got the power to sue anybody or be sued by others. If there will be a requirement for the fund in the company, the company cannot ask its members for any contribution.

• Easy Availability of Funds

  Nidhi Company is the most secure and most accessible way of accepting deposits from the end of the general public. Only the requirement is that they should be the registered members.

• Perpetual Existence

  Death or departure of any member is not going to affect a Nidhi Company as it has perpetual existence. Perpetual succession allows the Nidhi Company to continue till the time it gets dissolved legally.

• Meeting the Requirements of Lower and Middle Class

  Nidhi Companies play a crucial role in fulfilling the demands of people belonging to the category of lower and middle-income society by extending financial support to them without any further lengthy documentation involved.

• Ease of Management

  In Nidhi Company, bringing changes is not a matter of worry and concern, unlike other NBFCs.