What is Nidhi Company ?
Nidhi Company is basically a finance company which can accept deposit from members and lend the same money to its members. Nidhi Company mainly earns through interest on loans and its main expenditure is to pay interest on deposits (FD, RD and savings). Nidhi companies are governed by Nidhi Rules, 2014. They are incorporated in the nature of Public Limited Company and hence, they have to comply with two set of norms, one of Public limited company as per Companies Act, 2013 and another is for Nidhi rules, 2014. No RBI approval is necessary to register the company, as RBI has specifically exempted this category of NBFC in India to comply its core provisions such as registration with RBI.
Nidhi Company registration is simple and less complex as compared to other types of finance companies like NBFC which require RBI license to start. A Nidhi Company can be started with an initial capital of Rs.5 lakh and require at least seven people to start with (minimum 7 members). Nidhi Company registration also require three directors initially. Every promoter or director shall need a copy of PAN card, ID proof and address proof to apply for Nidhi Company in India. It takes around 15 to 20 days to get Nidhi Company registered.
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