Nidhi Company is a business entity that engages with the business of borrowing and lending money among their members. It’s a non financial business corporation who doesn’t do any business with someone who isn’t registered as a member. A community based financial corporation, it can be considered a backbone of Indian economy, for it provides financial option to those who can’t afford regular banks. Therefore, we are here tell you about the process of Nidhi Company Registration in India.
Overview of a Nidhi Company
There are many people in India who want to borrow money, but don’t have the resources to contact an actual bank for this purpose. To help such individuals, the government of India formulates the Nidhi Company.
Nidhi Company registration is the process that leads to the establishment of a Non banking Financial Company called Nidhi Company. You can also call it Mutual Benefit Company. “Mutual” because in a Nidhi Company, the money deposited is mutually shared among all the members. The process of Nidhi Company registration process is conducted online to incorporate a mutual benefit enterprise under the Companies Act, 2013.
Here are some of the points to remember about a Nidhi company:
- Nidhi Company Functions are only valid within India: A nidhi company is only allowed to cater to residents that exist within the country.
- A Nidhi company both lends and deposits: To reiterate our first sentence, a Nidhi Company is a business entity that engages with the business of borrowing and lending money among their members.
- Reserve Bank of India makes rules for the Nidhi Company: Apart from the process of Nidhi Registration, the guidelines of running and maintaining a Nidhi Company has been formulated by Reserve Bank of India.
- The depositors can earn money: The depositors of a Nidhi Company can earn a minuscule indirect income by earning a shallow interest on their deposits.
- All members co-operate: All the members of a Nidhi company engage with the process of borrowing and lending money among themselves.
Process of Nidhi Company Registration
Much like the any government procedure, the process of incorporation of a Nidhi Company involves the following three steps:
- Getting the documents furnished and filing the application for the incorporation of a Nidhi Company.
- Waiting for the Nidhi Ltd Registration application to be processed.
- Getting the certification of incorporation of your Nidhi Company.
It’s the requirements that make the procedure of incorporation of a Nidhi Company such difficult. They are as follows:
- Getting the KYC of all the directors: The requirement of Directors and members of a Nidhi company are as follows:
- There should be at least 7 members of a Nidhi Company.
- There should be at least 3 directors in a Nidhi Company.
- Getting the Digital Signature of all the members: Because of the Nidhi company registration online process, there is a need for an instrument that authenticates your documents as you submit them online. The digital Signature Certificate is that instrument.
- Getting the name of the Nidhi Company Reserved: Prior to filing the final application for the Nidhi Company registration procedure, you need to get approval of the name. However, filing the RUN application (Reserve Unique Name) is completely optional. If you’re confident that your name is suitable, you can file the application right away. However, there have been instances of MCA rejecting such applications.
- Drafting Memorandum of Association and Articles of Association:
- The Memorandum of Association (MOA) is the information sheet that details the objective of the company that’s to be registered. In case of Nidhi company, you have to mention a specific objective.
- Articles of Association (AOA) is the policy document of a company. It details the rules and regulations that a company has to follow.
Once you submit the application online with the documents required along with the Digital Signature, and the MOA & AOA, you’ll soon acquire the Certificate of incorporation.
Documents required for Nidhi Company Incorporation
Following are the documents that you require to incorporate a Nidhi Company:
- Copy of the PAN card of the director
- Copy of the ID proof of the shareholder and Director
- Photo ID’s of the shareholder and Director
- Copy of the address proof of the shareholder and Director
- Copy of the address proof of the registered place of business:
- Rent agreement if the place is on rent
- Registry of property if you own the place.
- Aadhar proof of the directors and shareholders
Cost of Nidhi Company Registration
The Nidhi Company Registration fees are not much. Our team of Nidhi company consultants can provide you end to end services at just INR 29,999/-.
A Nidhi Company allows those who can’t afford it a way to borrow and lend money within a community. That’s why, our Nidhi company registration consultant are always ready to take part in such a good endeavour. Contact our experts to know more.