Nidhi Company
Registration
Nidhi Company
- Are you interested in establishing a finance/loan business in India? Look no further, as a Nidhi Company might be the ideal option for you. Launching a loan business in India is made incredibly accessible and cost-effective through the Nidhi Company structure. With minimal documentation and the involvement of just 7 individuals, you can set up a Nidhi Company. The mandatory capital for Nidhi Company registration stands at Rs. 10 Lakh.
- To officially designate your company as a Nidhi company, it is essential to submit the NDH-4 form within 120 days of incorporation. This filing demonstrates your company’s attainment of a net owned fund of Rs. 20 Lakh and a minimum membership count of 200 individuals.
- Nidhi Companies are exclusively authorized to engage in the activities of deposit acceptance and lending funds solely to their members. Public engagement is not permitted; the company’s operations are confined to its members. The process of enlisting members under a Nidhi Company is straightforward, requiring minimal documentation and an uncomplicated procedure. Remarkably, Nidhi Company registration is the sole pathway to initiating a loan company in India without requiring RBI approval.
- After three years of operational activity, a Nidhi Company can establish up to three branches within its district. However, gaining approval from the Registrar of Companies (RD) is necessary for opening branches beyond the district. Notably, Nidhi Companies are confined to conducting business exclusively within the state. Consequently, should you intend to expand your operations to another state, initiating a separate Nidhi Company registration is imperative.
- It’s worth noting that thelegaltoday.com specializes in the registration and management of Nidhi Companies across India. With a vast portfolio encompassing numerous companies throughout the country, we are a distinguished consulting entity renowned for facilitating the establishment and effective management of businesses in India.
Key Features of Nidhi Company
To gain a comprehensive understanding of the concept of a Nidhi Company, it’s best to explore its defining features. A Nidhi Company operates as a financial institution that has the capacity to accept deposits from its members and subsequently extend loans using those funds. The company primarily generates revenue through the interest earned on the loans it disburses, while its primary expenditure revolves around paying interest on various types of deposits such as Fixed Deposits (FD), Recurring Deposits (RD), and savings accounts.
Affordable Registration Nidhi Company registration is remarkably cost-effective, starting at just Rs. 16,999, making it one of the most affordable options available online.
Interest on Loans Nidhi Companies are authorized to charge a maximum interest rate of 20% on loans, utilizing the reducing balance method for calculating interest.
Branch Expansion After three years of operation, Nidhi Companies are eligible to establish up to three branches within the same district.
Membership Requirement Nidhi Companies are permitted to transact business solely with their registered members. A minimum of 200 members must be enrolled within four months of the company’s incorporation.
No RBI Registration Requirement Unlike many financial entities, Nidhi Companies do not necessitate registration with the Reserve Bank of India (RBI) to engage in loan-related activities within India.
Interest on Deposits Nidhi Companies can accept various types of deposits, including Fixed Deposits, Recurring Deposits, and savings accounts, and can offer a competitive interest rate of up to 12% on these deposits.
Collateralized Lending Nidhi Companies can extend loans exclusively against assets such as gold, property, Fixed Deposits, and Government securities.
Exclusion of Microfinance and Vehicle Finance Nidhi Companies are not allowed to engage in microfinance business or vehicle finance business as part of their operations.
Documents Required for
Nidhi Company Registration
When initiating the registration process for a Nidhi Company, it’s imperative to gather the necessary documents to ensure a smooth and successful application. Here’s a list of the essential documents you’ll need
1. PAN & Photo
A copy of the Permanent Account Number (PAN) and a passport-sized photograph are mandatory for every director and shareholder associated with the company.
3. Address Proof
Furnish any one of the following address proofs for each director and shareholder: Bank statement, Mobile bill, Electricity bill, or Landline bill. This serves as a confirmation of the individual’s residential address.
2. ID Proof
Provide any one of the following identification proofs for each director and shareholder: Aadhaar card, Voter ID card, Driver’s license, or Passport.
4. Registered Office
For the company’s registered office, the following documents are required.
Important Note
- Copy of the electricity bill showcasing the registered office’s address. If this bill is not in your company’s name, a No Objection Certificate (NOC) from the property owner should be provided.
- If your office space is rented, include a copy of the rent agreement as proof of tenancy.
- Gathering these documents is a crucial step in the Nidhi Company registration process. Accurate and complete documentation is essential to meet the legal requirements and successfully establish your Nidhi Company in compliance with the applicable regulations.