Introduction:-
In the realm of financial institutions, Nidhi companies hold a unique position. They are a form of non-banking financial company (NBFC) primarily functioning in India. Nidhi companies play a pivotal role in encouraging savings and providing financial assistance to their members. In this article, we will delve into What is Nidhi company and how it works.
What is a Nidhi Company?:-
A Nidhi company is a type of mutual benefit society, where the primary objective is to cultivate the habit of thrift and savings among its members. These companies are essentially formed to facilitate the lending and borrowing of money among their members. The term "Nidhi" in Sanskrit means "treasure," which aptly reflects the essence of these companies - accumulating and preserving financial resources for the benefit of members.
How Does a Nidhi Company Operate?:-
1. Membership:
Membership in a Nidhi company is open only to individuals who share a common bond of economic goals. This can include residents of a particular locality or employees of a specific organization.
2. Savings and Deposits:
Members of a Nidhi company are encouraged to make regular savings and deposits, contributing to the common pool of funds. These savings are then used to provide loans and advances to the members.
3. Lending:
One of the primary functions of a Nidhi company is to provide loans to its members. These loans are usually extended against gold, immovable property, or fixed deposits. The interest rates on these loans are generally lower compared to those offered by traditional financial institutions.
4. Restrictions:
Nidhi companies are strictly prohibited from dealing with any other form of business like trading, manufacturing, or real estate. Their operations are limited to borrowing and lending amongst their members.
Nidhi Company Registration Process:-
1. Name Approval:
The first step in registering a Nidhi company is choosing a unique and appropriate name. This name must end with "Nidhi Limited" to clearly signify its nature.
2. Minimum Capital Requirement:
A Nidhi company must have a minimum paid-up equity share capital of Rs. 5 lakhs.
3. Membership:
To qualify for Nidhi company registration, a minimum of 200 members is required.
4. Document Submission:
The necessary documents including identity and address proofs of directors, shareholders, and the registered office must be submitted to the Registrar of Companies (RoC).
5. Application Filing:
Once all documents are in order, the application for Nidhi company registration can be filed with the RoC.
Online Nidhi Company Registration:-
The process of Nidhi company registration can now be conveniently completed online through the Ministry of Corporate Affairs portal. This digital platform streamlines the registration process, making it more accessible to aspiring entrepreneurs.
Conclusion:-
Nidhi companies play a crucial role in fostering a culture of thrift and savings in India. By providing a platform for members to pool their resources, these companies empower individuals to meet their financial goals. If you're considering establishing a Nidhi company, understanding the registration process is the first step towards securing your financial future.