Nidhi Company is a business framework that falls under Section 20A of the Companies Act, 1956 and is governed by the Ministry of Corporate Affairs (MCA), and certain Nidhi company rules to be followed in India.

It is incorporated to develop a habit of saving among its members only for their mutual benefit. While the major inception of funding for Nidhi Company is the contribution from the members.

In this article, we discuss some of the benefits to keep in mind before starting a Nidhi Company. Nidhi Companies can take/ lend funds only from/ its members. Having said that as Nidhi Companies only take/lend funds only from/to its members, RBI has exempted Nidhi Companies from the core provisions or regulations applicable on NBFC.  

Nidhi Company: Benefits or Advantages 

1. Easily get Fund: Nidhi Company can easily accumulate funds from the safest and the cheapest way of inviting deposits from the general public. You just need to take them as registered members.
2. Very Easy to Incorporate: It only requires 7 persons where 3 will be appointed as Director and the documentation is very simple can be easily done in no time
3. Increases Credibility: Nidhi companies enjoy better credibility as opposed to any other members based organization like Trusts, Cooperative Societies or NGOs.
4. Less level of Risk: Nidhi Company can take and provide loans to its members only according to the Nidhi Rules, formulated in 2014 which means the risk of non-repayment of loans is less as compared to other finance business. 
5. Fewer Regulations: Nidhi companies are governed under Nidhi Rules, 2014. The Central Government is the regulating authority controlling its activating and operating. Guidelines imposed by the RBI on Nidhis are very few.
6. Limited Liability: The liability of Directors and shareholders of the Nidhi Company is limited.
7. Low Capital Requirement: Ministry of Corporate Affairs (MCA) commands that the minimum capital requirement of Rs. 5 lakhs for Nidhi. Within the next fiscal year, the company’s capital has to be raised than the initial capital.
8. Micro Banking: Nidhi Company provide banking services to the remote and rural public of India which still is based in far-off locations. Also, is devoid of accessing finance from national banks and NBFC's.

How can we help you?

Nidhi Company could be easily formulated because of the less documentation and Limited Liability. If you too are wondering to set up a Nidhi Company, then the Online Legal India™ expert team can take care through the documentation process. We have a highly qualified CA/CS and 10+ years of experienced lawyers who would assist you to Register your Nidhi Company We have budgeted services for those who are willing to venture into a company, business or any other kind of organization. 

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