A Nidhi Company is a type of Non-Banking Financial Company (NBFC) unique to India. It primarily deals with lending and borrowing within its members or shareholders. Here's a detailed overview:

1. **Formation and Regulation**: Nidhi Companies are regulated by the Ministry of Corporate Affairs, Government of India, under the Companies Act, 2013. They are formed with the objective of cultivating the habit of thrift and savings amongst its members and to receive deposits and lend to its members for their mutual benefit.

2. **Membership**: Members of a Nidhi Company must be individuals, and it typically aims to serve small-scale savers and borrowers within a local community. The membership is limited to individuals who share a common bond, such as residing in the same locality or belonging to the same profession.

3. **Core Activities**: The core activities of a Nidhi Company include accepting deposits from and lending to its members only. They are prohibited from dealing with any other type of business such as trading, manufacturing, or providing services.

4. **Limited Operations**: Nidhi Companies are restricted in terms of the scope of their operations. They can only accept deposits and lend to their members, and they cannot accept deposits or lend to the general public. This restriction is intended to ensure that the operations of Nidhi Companies remain localized and focused on serving their members.

5. **Minimum Capital Requirements**: To start a Nidhi Company, it must have a minimum net owned fund (NOF) of Rs. 10 lakhs. This capital requirement is aimed at ensuring the financial stability of the company and protecting the interests of its members.

6. **Deposits and Lending**: Nidhi Companies primarily rely on the deposits from their members to fund their lending activities. They accept various types of deposits, including fixed deposits, recurring deposits, and savings deposits. They then lend out these funds to their members for purposes such as housing, education, or small business needs.

7. **Interest Rates**: The interest rates charged on loans by Nidhi Companies are usually lower compared to those charged by traditional lenders like banks. This is because Nidhi Companies operate on a non-profit basis and aim to provide affordable credit to their members.

8. **Regulatory Compliance**: Nidhi Companies must comply with various regulatory requirements prescribed by the Ministry of Corporate Affairs. These include filing annual returns, maintaining proper books of accounts, conducting regular audits, and adhering to certain lending limits.

9. **Limited Liability**: Members of a Nidhi Company enjoy limited liability, which means that their liability is limited to the extent of their share capital in the company. This provides a level of protection to the members' personal assets in case the company faces financial difficulties.

10. **Mutual Benefit**: The primary objective of a Nidhi Company is to promote the savings and borrowing habits of its members and to provide them with a convenient and affordable source of credit. By pooling their resources together, members can benefit from access to credit at reasonable rates and also earn returns on their deposits.

Overall, Nidhi Companies play an important role in promoting financial inclusion and providing access to credit for small savers and borrowers in India. They operate on a cooperative and non-profit basis, with a focus on serving the mutual interests of their members. However, they are subject to strict regulatory oversight to ensure the safety and soundness of their operations and protect the interests of their members.

Nidhi Company Fees