The term “Nidhi” word taken from hindi dictionary, which means “treasure”. Nidhi Company is a pubic limited company; it is a kind of non-banking finance company which is formed with the only purpose of Borrowing and lending money only to its members. Funds contributed by members are available for the members themselves at lower interest rates.A registered Mutual Benefit Society enjoys separate legal existence. The members and the company are different. The company can buy, sale, or acquire assets in its own name, it can also incur debt in its own name, also it can sue or be sued in its own name. However A Nidhi Company cannot accept deposits from and lend to anyone else, apart from its members.
A minimum of seven members are required to form a mutual benefit or Nidhi company.
Key features of Nidhi Company:
1. It must have minimum paid–up capital of Rs 5 lakhs. There is no restriction on maximum number of members. The shares allotted to the members are freely transferable.
2. The Liability of Directors is limited to the extent of amount remaining unpaid on shares subscribed by them.
3. Nidhi Company is not allowed to raise funds form general public.
4. Nidhi Company can only do business of accepting deposit and lending money to its members only, so if you want to deposit any amount in a nidhi Company or want to avail a loan from a Nidhi Company, first you have to become a member by subscribing to shares of the Company.
5. Nidhi Company can open upto three branches within the district; nidhi company is not allowed to operate outside the home state. For multi state operation another nidhi company will have to be registered, though shareholders can be the same.
6. Nidhi is the safest and the cheapest way of raising funds from the General public (just by registering them as members).
7. Nidhi Company is not allowed to do micro finance business & vehicle finance business.
8. A Nidhi shall not repay any deposit within a period of three months from the date of its acceptance.
9. Where at the request of the depositor, a Nidhi repays any deposit after a period of three months, the depositor shall not be entitled to any interest up to six months from the date of deposit.
10. Where at the request of the depositor, a Nidhi makes repayment of a deposit before the expiry of the period for which such deposit was accepted by Nidhi, the rate of interest payable by Nidhi on such deposit shall be reduced by two per cent.
11. Nidhi company name is mentioned as (Business Name Nidhi Limited).
Time duration for Nidhi company registration: Normally it takes 30 working days to get the Nidhi company regi. subject to proposed company name availability approval.
