The term “Nidhi” means a treasure. It is regulated by article 406 of the Companies Act of 2013 and the Nidhi Rules of 2014. The Nidhi Company is designated as one of the types of NBFC. However, RBI approval is not required to start a Nidhi business, as it is an exempt category. Its main objective is to lend and borrow money from its members and to maintain the habit of saving among its members. Nidhi companies are mainly registered in the southern part of India. Nidhi is registered as a corporation because it must have at least 7 subscribers and at least 3 directors and its name end with the words “Nidhi Limited”.

Nidhi Company Advantages

It is not necessary to obtain an RBI license to borrow and lend money. Since Nidhi companies are subject to the 2014 Nidhi rules, they have the least amount of RBI intervention. There is less risk in repaying loans.

Restrictions on Nidhi Company

1) The Nidhi company cannot carry out fundraising activities for warrants, rent-purchase, and leasing. Nidhi Society cannot lend or lend money to anyone other than its members.

2) The minimum capital required for the deposit is Rs 5,000,000

3) Nidhi Company cannot issue preferred stock, bonds, or debt instruments.

4) Only guaranteed loans can be granted. H. The uncertainty of gold, silver, or other precious jewels.

5) The loan repayment period should not exceed one year.

Post-foundation requirements

1) The Nidhi society must maintain at least 200 members in the year following its foundation.

2) The net funds must be Rs 10 lakh or more, the net funds being equal to the share capital + the free reserve, including the accumulated losses (-) (-) of intangible assets.

3) The ratio of net funds (NOF) to deposits should not exceed 1:20.

4) The savings account must be opened before INC-20A can be completed.

5) Once all these conditions have been met, the NDH-1 must be submitted within 90 days after the end of the first fiscal year after the foundation. It is a return to legal compliance.

6) Form NDH-3 must be submitted within 30 days after the end of each semester. It is a semi-annual report.

7) Form NDH-4 must be submitted to existing companies within one year from the founding date or within six months after the start of the 2019 Nidhi rules. If the company is newly created, it must be deposited within sixty days after the expiration of one year from the date of incorporation.

In this way, the Nidhi company must declare that it complies with all the rules and regulations. If Nidhi does not meet the requirements of this rule, he cannot submit forms SH-7 and PAS-3.

8) To extend the term, a form must be submitted, namely NDH-2, and the term is 30 days from the end of the first fiscal year. This form is used when the Nidhi company does not keep its members at 200 and the ratio of net funds to deposits is greater than 1:20.

9) The normal annual registration forms are the same as for other companies registered with the same term as forms AOC-4 and MGT-7.

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