The term ‘Nidhi’ refers to finance, stock or fund, or treasure. A Nidhi company is a form of company in the sector of Indian non-banking investment or investment that gets included with the purpose to develop the practice of thrift as well as profits or savings amongst its members. Activities of Nidhi Company include borrowing and giving money among their members for their common and mutual benefit. Registration of Nidhi Company takes place following the requirements declared in Section 406 of the Companies Act of 2013.
Why is Nidhi Company Registration required?
The various reasons for Nidhi Company Registration in India are:
Simple Formation Method
- The method of Nidhi Company structure is free from all the complexities. In other words, it’s easy and simple to form a Nidhi Company.
- There is no requirement for a Nidhi Company to attain a license from the Reserve Bank of India. The development of this company requires a minimum documentation method.
- In the proof of Nidhi Company, there is a condition of only seven members. Three members out of the seven members will be the executive or director.
- Ministry of Corporate Affairs, i.e., MCA is the accountable body behind the management of Nidhi Company. Along with this, RBI can issue instructions, if needed.
- It takes about 10-15 days for a Nidhi Company to get enrolled or registered.
Limited RBI Regulations
The management appointed by the Reserve Bank of India on the Nidhi Companies is restricted. By its quality of the activity, Nidhi Company comes under the NBFC level, and also it is an investment or finance company. These businesses should incorporate themselves with the Ministry of Corporate Affairs (MCA) as public limited companies.
Simple Nidhi Rules
- Getting support from the RBI side is not a required condition. Nidhi Companies follow the Nidhi Rules, 2014 given by the centre for the regular functioning and running of the company.
- These organisations got releases from foremost requirements otherwise appropriate in the case of Non-banking Financial Companies in India.
- Reserve Bank of India won’t be building any obstacles in the method of Nidhi Company Registration in India. Therefore, you can use such types of advantages of Nidhi Company Registration in India.
No Scope for External Parties or outsiders
- The organisation, as well as control of Nidhi Companies and the advantages that it provides, are involved with and to their members only.
- external parties or outsiders didn’t get the authority to interfere in any concerns of Nidhi Companies by any means. Neither they have any interest to interfere in the performance of the Nidhi Companies, nor can the outside parties get credit from these organisations.
- Besides this, the external parties or outsiders can’t deposit money, and also they can’t interfere in the management-related arrangements.
Low Capital Provision
The minimum condition of capital is one of the important advantages of Nidhi Company enrollment in India. According to the Nidhi Rules of 2014, the net owned stock or fund of Nidhi Company requires to be Rs 10 lakhs. MCA in their directives declared that the least capital requirement for Nidhi Company enrollment in India is Rs 5 lakhs.
Minimum Capital Requirement
In addition to this, the capital requires to get promoted to the amount of at least Rs 10 lakhs in the time boundary of 1 year. In comparison to various financial organisations, the capital required for filing a Nidhi Company in India is less.
Micro Banking Assistance
Nidhi Companies grant support to the remote and rural forms of India by providing micro banking services. Those states located in far-off locations get micro banking services through Nidhis.
Stimulate Saving Practices
One of the notable advantages of Nidhi Company in India is that it excites the maintenance and saving habits amongst its members. From a six-year-old child to a 60-year-old man, everyone is craving to do savings. There is a belief in Nidhi Company, and therefore, features won’t be placing restrictions on their maintenance habits.
Facing the Demands of Lower and Middle Class
Nidhi Companies begin from the front when it proceeds to meet the requirements of those people who refer to the lower as well as the middle class of the community by allowing them financial aid without any additional responsibility of documentation. Therefore, it is one of the important advantages of Nidhi Company registration in India.