Benefits of Starting a Nidhi Company

The main objective to start a Nidhi Company is to encourage thriftiness and a habit of saving among all its members. So that they become self-sufficient and are able to meet their respective financial requirements in life arising from time to time smoothly. The funds of a Nidhi Company include only that amount which is contributed by its members or shareholders.

Limited Liability

Liability of Directors and members of the Nidhi Company is limited. Thus, in case the company su

ffers from any loss and faces financial distress in the course of its primary business activity, the personal assets of Directors or members are not at risk of being seized by banks, creditors, and government.

Better Credibility

Nidhi companies enjoy better credibility as compared to any other members based organizations such as Trusts, Cooperative Societies or NGOs.

Better option for Savings

One of the main goals of Nidhi Company incorporation is to encourage the habit of saving among the members of the Company. This is how it achieves its other goal of being mutually beneficial. The Nidhi Companies lend and borrow money to and from its members only.

Easy Access of Public fund

The members of the Nidhi Company can take a loan at a cheaper rate from its own Company than borrowing from banks and other NBFCs. Moreover, the process of taking the loan and customized services are much more convenient and faster.

Ease of Fund

Nidhi is the safest and the cheapest way of inviting deposits from the general public. You just need to get them registered as members.

Micro Banking

Nidhis provide Rural banking services to the remote population of the nation which still is far-away and hence devoid of national banks and NBFCs.

Better Option than Credit Co-operative

Nidhi company is most preferred by the small financer as this is a close substitute for credit co-operative society Once a Nidhi company has been registered, you can avail of all the benefits of credit co-operative society as well take the advantage of double deposit.

Easy processing

Borrowing and lending to known persons, i.e., its members, is much less complicated than dealing with banks, where the procedure is fixed.

Few Regulations

Nidhi companies follow the Nidhi Rules, 2014. The Central Government is the regulating authority controlling its activities and working. Guidelines imposed on Nidhi by the RBI are limited.

Low Capital Required

Ministry of Corporate Affairs (MCA) mandates the minimum capital requirement of Rs. 5 lakhs for Nidhi. And, within 1-year, the capital shall be increased to at least Rs. 10 lakhs.

Easy Registration Process

It is a simple process to register Nidhi Company. It is not mandatory for Nidhi Companies to obtain a license from RBI. Nidhi companies have to incorporate themselves as a public company with the MCA.

Low Registration Fees

After the Amendment in Companies act 2013, Nidhi Company is governed by Nidhi Company Rules as well as the Companies Act of 2013.

The Fees, DSC & Other Expenses are approx. Rs. 25-30,000. These include Government fees that vary from State to State

Fulfilling the needs of middle or lower-income groups

Nidhi Companies play an important role in fulfilling the needs of middle and low-income groups by providing them financial help with minimal documentation and formalities.

Loans that have minimum criteria of eligibility

The small wage earners are usually unable to get loans from traditional banks because they don’t meet the eligibility criteria. For them, Nidhi Company is a good way to obtain loans because of fewer conditions.

No external involvement

Nidhi Companies take funds from their members and further provides loans to their members only. This means no external factors are affecting the working of these companies. The investors/members themselves govern the operations of the company.

Perpetual Successions

Nidhi Company does not get dissolved by the death, retirement, insanity or insolvency of any of its members or shareholders.

Separate Entity

Nidhi Company is a separate entity that can acquire assets and incur debts in its own name.