Nidhi Company Registration in Jaipur

The word Nidhi means “Treasure”. If you want to start a Nidhi company then Jaipur maybe the best place for you. Today, there are many Non-Banking Finance Companies that have become very popular. Nidhi Companies are there to help our savings habits. Institutions like banks, finance companies; Nidhi Companies, etc are there to help us inculcate that habit. In this article we will discuss Starting a Nidhi Company in Jaipur.

Table of Content

What are Nidhi Companies?

Let us talk shortly about what are Nidhi Companies and the regulatory framework governing it. Section 406 of the Companies Act, 2013, 2013 talks about the provisions regarding Nidhi Companies and its application. Moreover, there are about 257-300 Nidhi Companies in the country. 

The core business of a Nidhi company is to borrow and lend money to its members only. Further, a Nidhi Company can take deposits from its members and offer money to them. A Nidhi Company is based on the principle of Mutual Benefits.

It is regulated by both the RBI and the Central Government (Companies Act, 2013, 2013). However, you don’t need a licence from RBI. Further, there are regulations in place so that your costumer’s money is safe.

Advantages of starting a Nidhi Company in Jaipur

Jaipur, the Pink City, has historically been a great place to start a business. People want to start a Nidhi Company as people are not only looking to invest but also to take loans. Further, there are many professional services that are available. Resources are available at cheap rates in the Pink City. Further, there is a free flowing capital. As a Nidhi Company is not directly controlled by the RBI you can easily establish yourself as a trustworthy business partner.

Importance and Benefits of Nidhi Company

The following are Nidhi Company’s benefits:

  • Nidhi Company lends money in remote and rural areas of the country, as well as in off-site locations.
  • Members’ liability is limited to the amount of capital they deposit in the Company, and they cannot be held personally liable for it. It is also a legal entity, which distinguishes it from its Members and Directors.
  •  A Nidhi Company has fewer complexions and may be founded with an amount of Rupees 10 Lakhs, which must be increased to 20 Lakhs within 120 days of creation, and Nidhi Company loans are available at cheaper interest rates than NBFC loans.
  • Because they can only lend and borrow money from its members, the primary purpose of establishing Nidhi Company is to instill a culture of saving among the people for their mutual benefit.
  • Nidhi Company is a co-operative society that is suitable for small financiers. It will be able to take use of the benefits of a credit cooperative once registered.
  • Nidhi Company can receive deposits from its members through a variety of accounts, including Saving Accounts, FD Accounts, and Rd Accounts, which is less cumbersome than receiving money from banks and other financial organizations.

Documents Requirement

Following set of documents are required for a Nidhi Company

  • ID Proof of Members
  • PAN Card of Members as well as directors
  • Any utility bill
  • Copy of rental agreement if premise is rented
  • Passport size photo of members and directors
  • Present Address Proof

Nidhi Company Incorporation Procedure

The method for forming Nidhi Company is as follows:

Step 1: Complete the Application Form: You must first answer the simple questionnaire provided by our knowledgeable team.

Step 2: Document Processing: In the second step, we will require your papers in accordance with the questionnaire you filled out so that we may arrange and process them as needed.

Step 3: DSC Application: To begin, a DSC (Digital Signature Certificate comprising of E-signatures) must be created. Furthermore, acquiring a statement from the government is required for the creation of a Nidhi Company, which must be officially presented at the time of incorporation.

Step 4: Name Availability: The next step is to check the name’s availability. The name should be different and not similar to the name of any already registered firm. It is conceivable that at least 1-2 days will be required.

Step 5: E-filing for Company Incorporation: Once the name has been approved, an online application utilizing SPICE+ and the necessary papers acquired from the client with ROC must be completed. The MOA and AOA must both be submitted electronically. Again, this treatment takes around 2-3 days.

Step 6: Obtain a Certificate of Incorporation: Once the business is founded, we will deliver the necessary paperwork, including the Incorporation Certificate, MOA, AOA, and Digital Signatures.

Legal Requirements of Nidhi Company

As the general public’s money is involved, there has to be certain regulatory framework to be followed. Let’s look at the overview of rules and regulations that a Nidhi Company needs to follow,

  • Minimum Capital Requirement: A Nidhi Company should have minimum paid-up equity share capital of Rs.10 lakhs. There cannot be any preference shares issued by a Nidhi Company. The Nidhi Company will have the status of a public limited company.
  • Members: At the time of Incorporation a Nidhi Company should have at least 7 members and 3 members out of these have to be directors of the Nidhi Company.
  • Directors: The director of a Nidhi Company can hold his office for a period of 10 consecutive years. The person appointed as director should fulfill the conditions for qualification and disqualification of directors as per Companies Act, 2013. The director is eligible for re-appointment after 2 years of being a director.
  • Digital Signature: As all the documents need to be self-attested, a digital signature should be obtained from all the members at the time of incorporation.
  • Name of the Company: The name of any Nidhi Company should end with Nidhi Limited. The name of the Nidhi Company has to be obtained as per provisions of the Companies Act, 2013. The name should not match with or should not be suggestive of any other company. The company should choose a name and wait for its approval.
  • Incorporation: The registration of a Nidhi Company can be applied through form SPICe+. The application should have Memorandum of Association and Articles of Association of Nidhi Company. The declaration from directors under form DIR-2 should also be submitted along with application. If the application is found in order, Certificate of Incorporation is issued.
  • Application for PAN and TAN: As a Nidhi Company is a separate entity; it should have its own PAN and TAN number.
  • Net Owned Fund: For new Nidhi Companies, the Net Owned Fund (NOF) limit should be set at 20 lakh and must be met within 120 days (4 months) after establishment. This regulation is relaxed for existing Nidhi’s companies, and those companies will have an 18-month time limit to keep this NOF limit from the moment these laws go into effect.

Conclusion

As discussed above, a Nidhi company can easily provide accessible loans to its members. In this article we discussed an overview of how a Nidhi Company is registered and the legal framework. The business scene in the city of Jaipur is giving quite good positive vibes to people to come forward and start new businesses. Further, a Nidhi Company is a good method to venture into financial market of Jaipur and become a trusted lender and at the same time be able to provide returns to people on their savings. 

CS Madhavi Singh Rajawat is a commerce graduate from IIS University, Jaipur and an associate member of Institute of Company Secretaries of India. She is also an LLB aspirant. Her interest lies in the field of corporate and securities laws, general corporate advisory matters and FEMA matters and compliances, litigation services, and also in NCLT related services. She has proficiency in the drafting of documents

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