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What are the benefits of registering Nidhi Company?

What is a Nidhi Company?

Nidhi Company is a non-banking finance firm that comes under Section 406 of the Companies Act, 2013. The basic business of a Nidhi company is lending money to the member of the company.  Permanent funds, mutual benefit funds, a mutual benefit company, and benefit funds are few examples of a Nidhi Company.

Characteristics of Nidhi Company

  • A Nidhi company promotes small savings among the middle and lower middle class.
  • Accepts term deposits based on timely returns
  • The members of a Nidhi Company get easy access to loans against collaterals.
  • Promotes effective means of savings and sanctions loans with minimum documentation.
  • The membership structure is very rigid and therefore it follows a very secure means of investment.
  • A Nidhi company mainly deal with and support small income groups.
  • Depends on the honesty, integrity and loyalty of a member.
  • Setting up a Nidhi Company does not require any RBI regulations
  • There are lesser level of risks
  • A Nidhi company follows a cost-effective registration process
  • The objective of a Nidhi is to cultivate the habit of savings amongst the members.

Minimum requirements for Nidhi Company

  • Should be a Public Company having a minimum paid-up capital of Rs. 5 lakhs.
  • Not allowed to issue preference shares.
  • The last words of the name of the company should be “Nidhi Limited”.
  •  Minimum 3 Directors who must mandatorily be members of Nidhi Company.
  • Minimum 7 shareholders.
  • Minimum of 200 members

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