Nidhi Company Registration
Ideal for Financial and Banking Services with many exemptions from various Regulations
What is a Nidhi Company and its Incorporation?
A Nidhi Company is a Structured small financial services provider which enjoys many exemptions from RBI regulations and other acts as well. Nidhi Company is a business structure incorporated under Section 406 of the Companies Act, 2013 read with Nidhi Rules 2014 and is governed by the Ministry of Corporate Affairs (MCA). Nidhi Company is mainly formed for developing the habit of savings among its members only for their mutual benefit. The major source of funding for the Nidhi Company is the contribution from the members.
Nidhi Company is a certain category of NBFC. Though not directly regulated by the RBI, still RBI has powers to issue directives for them related to their deposit acceptance activities. Moreover, because these Nidhis deal with their shareholder-members only, they have been exempted from the core provisions of the RBI Act and other directions applicable to NBFCs. Therefore, Nidhi Company is an ideal legal entity to take a deposit from and lend to a specific group of people.
Passport Sized photographs of all the directors.
ID proof of all the designated directors and shareholders. (PAN card and Passport are valid).
Address proof of all the directors and members (Ration Card, Aadhaar Card, Passport, Voter ID, and Utility Bill – electricity/water/mobile).
Address Proof of the Company (Make sure that the address proof is not older than 2 months).
Copy of the Property papers (if the property is owned).
NOC (No-Objection-Certificate) from the owner (if the property is rented).
Prerequisites before Registration
|Period||Minimum period of 6 Months (except Recurring deposits which shall be for a minimum period of 12 Months) and a maximum period of 60 months.|
|Saving Account Deposits||Maximum balance in a savings deposit account qualifying for interest shall not exceed Rs.1,00,000 at any point of time and the rate of interest shall not exceed 2% above the rate of interest payable on savings bank account by nationalised banks.|
|Term Deposits||A Nidhi may offer interest on fixed and recurring deposits at a rate not exceeding the maximum rate of interest prescribed by the Reserve Bank of India which the Non- Banking Financial Companies can pay on their public deposits (12.5%).|
|Repayment Period||A Nidhi Company:
|Repayment in case of death||In case of death of depositor, it shall be repaid to the surviving depositor or nominee or legal heir with interest upto the date of repayment without any reduction in the interest rate.|
|Ceiling Limit for Loans||
|Ceiling Limit for Loans in case of Loss||Where a Nidhi has not made profits continuously in the
three preceding financial years, it shall not make any
fresh loans exceeding 50% of the maximum amounts of
loans specified in clauses (a), (b), (c) or (d).
|Default in Repayment||A member who has defaulted in repayment of loan shall not be eligible for further loan|
|Loan against Gold, Silver and Jewellery||Repayment period not exceeding One Year) Loan sanctioned would be Upto 80% of the value of the Gold, Silver and Jewellery.|
|Loans Against Immovable Property||
|Loan against fixed deposit receipts, national savings
Certificates, other government securities and insurance Policies
|Interest on loan||The rate of interest shall not exceed 7.5% above the highest rate of interest offered on deposits calculated on reducing balance method. Nidhi shall charge the same rate of interest on the borrowers in respect of the same class of loans.|
|Nidhis which have adhered to all the provisions of these rules & may provide locker facilities on rent to its members subject tothe rental income from such facilities not exceeding 25% of
the gross income.
Compliances of a Nidhi Company are divided into three parts:
Pre- Incorporation Compliances:-
Post- Incorporation General Compliances:-
The Nidhi Company must ensure the following compliances within a year of Nidhi Company registration:
Post Incorporation Annual Compliances:-
It is mandatory for Nidhi Companies to follow annual compliances mentioned below:
|Form NDH-1||Return of Statutory Compliance. This form contains all the details regarding members, deposits, loans, reserves etc. for the full financial year.||Within 90 days from the close of financial year along with fees. It must be duly certified by Practicing Professional.|
|Form NDH-2||Application for Extension of Time. This form is filled in case :
||NDH-2 must be filed with the Regional Director within 90 days from the closure of financial year along with the prescribed fees.|
|Form NDH 3||Half-yearly return to be filed with the ROC (Registrar of Companies).||Within 30 days from the conclusion of half a year. It must be duly certified by a Practicing Professional.|
|Form MGT-14||For filing the relevant Board Resolutions with ROC||Within 30 days of passing of Board Resolution.|
|Form AOC-4||For filing financial documents and other supporting documents to the Registrar of Companies.||Within 30 days of the annual general meeting.|
|Form MGT-7||Annual Return||Within 60 days of the Annual General Meeting.|
|ITR-6||Income Tax Return||By 30th September|
Event Based Compliances:-
Generally, event-based compliances are required to file only once during the company incorporation process. Furthermore, these compliances must be followed when there is any change in the company’s structure which are non-periodical in nature.
Below is the list of event-based compliances:
Timely filing of compliances is mandatory for every Nidhi company. Non- Compliance attracts penalty for the Nidhi Bank Operators.
Hence it is important to hire professionals to help in the compliance procedures.