What is a Nidhi Company?
Nidhi Company, a form of company registered under the Companies Act, 2013, belongs to the category of non-banking finance firms. Incorporated with the sole objective of cultivating the habit of thrift and reserve funds amongst its members, the basic business of this company is to facilitate lending money between the core members of the company. It is a Non-Banking Financial Company (NBFC) which does not require any license from the RBI.
Examples of a Nidhi Company are: permanent funds, mutual benefit funds, mutual benefit companies and benefit funds. The core idea behind creating a Nidhi Company is to receive funds/deposits from members or lend to them, for the mutual benefit of both parties. That Nidhi Companies cannot deal with anybody other than its members.
Why Nidhi Company?
- No minimum share capital requirement
- Easy transfer of ownership
- Tax benefits
- Easy to manage and fewer complications within the entity
- Exemptions and privileges under Companies Act, 2013
- Relaxation in compliances
- Better credibility compared to Mutual Benefit Organizations
- Uninterrupted existence
- Encourages savings
Advantages of Nidhi Company
Borrow at Minimum Rate
Members can borrow money at a minimum rate compared to that of banks. This poses as a major advantage for people in need of money at unexpected times.
Encourages Savings
Members are encouraged to save money in a Nidhi Company. After all, the company is a mutual benefit society wherein members can lend/borrow money and exchange financial aid among them.
Dependable Much
Since lending/borrowing takes place between members, the procedure is fixed, less complicated and is informal compared to bank setting. The relaxation in compliances also makes it popular.
3rd Floor, Viram House, 59, Janmabhoomi Marg,Fort Mumbai –1
+91-224-347-1800
Mon - Sat9AM - 6:30PM