Frequently Asked Questions about Nidhi Company Registration in India
1. What is a Nidhi Company?
A Nidhi Company is a type of non-banking financial institution in India that operates as a mutual benefit society. It encourages its members to save and lend money among themselves, promoting a culture of thrift and financial stability.
2. What are the requirements for starting a Nidhi Company?
To start a Nidhi Company, there must be a minimum of seven members, and each member must be an Indian citizen. The company must have a minimum net owned fund of Rs. 10 lakh, and it should maintain a ratio of 1:20 between its net owned funds and its deposits.
3. How long does the Nidhi Company registration process take?
The Nidhi Company registration process usually takes around 30 to 45 days, depending on the accuracy of the documents and fulfillment of legal requirements. Timely completion of necessary paperwork and cooperation with the authorities can help expedite the process.
4. What documents are required for Nidhi Company registration?
The required documents for Nidhi Company registration include proof of identity and address for all the proposed directors and shareholders, address proof of the registered office, declarations from the directors and shareholders, and a detailed business plan.
5. Can a Nidhi Company provide loans to non-members?
No, as per Nidhi Company rules, a Nidhi Company can only provide loans or advances to its registered members. The main objective of a Nidhi Company is to promote the habit of savings and lending among its members, and it cannot engage in any other form of business activities.
6. Is there a minimum capital requirement for a Nidhi Company?
Yes, a Nidhi Company must have a minimum capital of Rs. 5 lakh at the time of its registration. This capital requirement ensures that the company has sufficient funds to meet its members' lending needs and maintain financial stability.
7. Are there any restrictions on the activities of a Nidhi Company?
Yes, there are certain restrictions on the activities of a Nidhi Company. It cannot issue preference shares, debentures, or any other form of debt instruments. It is also prohibited from carrying out chit fund, hire-purchase finance, or leasing activities. A Nidhi Company's primary focus should be on the cultivation of thrift and savings habits among its members.
8. Can a Nidhi Company accept deposits from non-members?
No, a Nidhi Company can only accept deposits from its members. It cannot accept deposits from the general public or any individual who is not a registered member of the company.
9. Can a Nidhi Company convert into any other type of company?
No, a Nidhi Company cannot convert into any other type of company. It must continue its operations as a Nidhi Company and cannot be transformed into a private limited company, public limited company, or any other form of business entity.
10. Is it mandatory for a Nidhi Company to have a minimum number of branches?
No, there is no specific requirement for a Nidhi Company to have a minimum number of branches. However, it can open branches as per its business requirements, provided it complies with the applicable rules and regulations set by the Ministry of Corporate Affairs.