If you are thinking to start a finance business, Nidhi Company is one of the ways to proceed with. Nidhi Company is a mutual benefit company dealing with shareholder members and registered under section 406 of the Companies Act, 2013. Nidhi Company is incorporated with the main objective of cultivating the habit of saving. There are numerous benefits of Nidhi Company as it carries business of lending and depositing the money among its members for their mutual benefit. Nidhi Company registration in Jaipur is also hassle free, quick and simple as compared to most of the other NBFCs.
Why to go for Nidhi Company Registration in Jaipur?
Jaipur or Rajasthan is one of the hubs for finance market. People prefer to set up their finance business in the form of NBFC, Microfinance or Nidhi Companies to kick start their business. On the other hand, due to its proximity to Delhi, people now prefer to set up their businesses here. Furthermore, the cost of maintaining a business in Jaipur is relatively low
Checklist for of Nidhi Company Registration in Jaipur
- Basic Requirement
- Before Incorporation: Nidhi Company is a public company having minimum paid equity share capital of Rs. 5 Lakhs. To start a Nidhi Company, the promoters have to comply with The Nidhi Rules, 2014 and Company Act, 2013. Minimum 7 members and 3 directors are required to incorporate a Nidhi Company. Members and directors can be same.
- After Incorporation: Within one year of incorporation Nidhi Company should have a total of 200 members and net owned funds of at least 10 lakh rupees or more. Every Nidhi shall ensure that it has unencumbered term deposits of not less than 10 per cent of the outstanding deposits as specified in Nidhi Rules. The ratio of the net owned funds to the deposits should also not be more than 1:20.
- Documents Collections
The promoter has to collect all the documents which are required for Nidhi Company Registration.Documents Requirement for Nidhi Company Registration in Jaipur
- PAN card
- Identity proof- Aadhar card, voter ID, driving license
- Digital Signature (DSC)
- Proof of registered place of business – ownership proof or rent agreement as applicable, electricity bill and no objection certificate
- Memorandum of Association of the company
- Articles of Association of the company
- Digital Signatures
All the members in the Nidhi Company have to apply for digital signature.
- Name Approval: Rule 8 of the Company incorporation rules talks about company name. The promoters can apply for Name through Spice+ A part. The name is reserved for a minimum period of 20 days which can be extended by paying extra govt. fees. The name should be distinctive from any other entity and no trademark should subsist on such name. The name should end with “Nidhi Limited”.
- Incorporation: Once all the documents of company registration are signed by the promoters, they have to file incorporation in form SPICE+
- Follow Up and Registration Certificate: Once the company registration is filed, the next step is regular follow-up with the government. After verification of all the documents, the authority grants registration to the company along with PAN and TAN. Registration process takes 5-7 days.
They are prohibited to do micro finance, unsecured loan, personal loan, hire purchase and vehicle finance business.
Working of a Nidhi Company
They give loan to the members at a moderate rate and accumulate deposits from the members.
They earn through interest on loans and its main expenditure is to pay the interests on the deposits. Furthermore, they do not require RBI registration for engaging in loan business and can also earn 20% interest on loan on reducing the balance method.
Benefits of Nidhi Company
Nidhi Companies are governed by section 406 of the Companies Act, 2013 and Nidhi Company Rules, 2014. Although the Nidhi Company is regulated by the Companies Act, 2013, they are discharged from certain provisions of the Act because they deal with their members only. One of the major benefits of Nidhi Company is that they can accept the deposit from the members and lend money without any interference of RBI. There is no RBI requirement for Nidhi Company as they are exempted from RBI provisions. They don’t need RBI license or a 2-crore capital requirement.
They lend in gold loans, etc. and accept deposits like fixed deposits, recurring deposit and savings. Another benefit of Nidhi Company is that it is the cheapest form of NBFC and it can be opened by anyone in India.
- Easy formation : Nidhi Company is easy to form as it requires less documents and has a simple registration process.
- Minimum risk of nonpayment of loans: The main benefit of Nidhi Company is that it is easy to make donations and the loan procedure is also easy for the members. Since the loan rate is less, it attracts the members to invest in savings. Most of the investments are secured and there is less risk as compared to other financial businesses.
- Limited role of RBI: Nidhi Company is a type of NBFC but still it does not require RBI approval. RBI have exempted Nidhi Company and they come under Nidhi Rules, 2014. This is one of the most important benefits of Nidhi Company which attracts people as establishing any other type of NBFC is much more complex and governed by RBI.
- Low capital requirement: Establishing a Nidhi Company is pocket friendly also as it requires a low capital of Rs. 5 Lakhs which has to be Rs. 10 Lakhs or more in a span of 1 year of registration.
- No outside interference: Nidhi Companies are formed exclusively for its members and provide benefit to them. No outsiders is allowed to intervene in a Nidhi Company. Hence, they offer loans at charming rates with least documentations. They aim to inculcate saving among the members and offer advantages to the investors as well as borrowers.
Compliances of Nidhi Company
As per notification from the Ministry of Corporate Affairs dated 3rd February 2020, the Nidhi Amendment Rules, 2020 amendment was released where the stakeholders have to use the revised and latest forms by the Nidhi companies. Following are the important forms required to be submitted by the company:
- Form No.NDH-1 – Return of the Statutory Compliances: Within 90 days from first financial year closure or second financial year, Nidhi shall return Form No. NDH-1 along with the fees as given under the Companies (Registration Offices and Fees) Rules, 2014.
- Form No.NDH-2 – Application for the extension of time: If Nidhi Company doesn’t comply with form No. NDH-1, they have to apply for extension with Form No. NDH-2. along with fee given in Companies(Registration Offices and Fees) Rules, 2014. The Regional Director may consider the application and pass orders within thirty days of the application.
If the Nidhi Company fails to comply with this rule even after extension, Nidhi company cannot accept deposit till compliance with the Nidhi Rules and they will be liable for penal consequences.
- Form No.NDH-3 – Return of Nidhi Company for the half year ended: They have to file half yearly Form NDH-3 within 30 days from conclusion of each half year.
- Form No NDH-4 – For filing application for declaration as Nidhi Company and updating status
- For New Nidhi Company: Within 60 days after the expiry of 1 year from the date of its incorporation
- For existing Nidhi Company: Within a period of 1 year from its date of incorporation OR within 6 months from the date of commencement of Nidhi Rules 2019, whichever is later.
The evolving financial market in Jaipur has set forth a new trend of establishing Nidhi Company as they are people friendly offering attractive benefits to its members. They give simple and helpful credits to the members and the reimbursement time frame. Although there are innumerable benefits of Nidhi Company, still have a long road ahead with more and more people opting for saving in Jaipur in the future.