The Ministry of Corporate Affairs (MCA) has recently intensified its scrutiny of Nidhi companies, leading to significant penalties for numerous entities that have violated various provisions of the Companies Act.
About the Nidhi Companies:
- A Nidhi company is a type of non-banking finance company, whose core business involves borrowing and lending money between its members.
- Also known as: Permanent Fund, Benefit Funds, Quasi Bank, Mutual Benefit Funds, and Mutual Benefit Company.
Objective of Nidhi Companies:
- Designed to promote thrift and savings among members.
- Focuses on accepting deposits from and providing loans to its members for mutual benefit.
Key Criteria for Nidhi Companies
- Must have no less than 200 members.
- Must maintain Net Owned Funds of ₹10 lakh or more.
Regulatory Framework:
- Nidhi companies are governed under Section 406 of the Companies Act, 2013 and Nidhi Rules, 2014.
- They do not require an RBI license and have a minimum capital requirement of ₹10 lakh.
- At least 7 members are required to form a Nidhi company, with 3 being directors.
- Regulated by the Ministry of Corporate Affairs (MCA) that issues directions on deposit acceptance activities.
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Frequently Asked Question:
What is a Nidhi company?
A Nidhi company is a non-banking finance company focused on borrowing and lending money between its members.
What is the primary objective of Nidhi companies?
The objective is to promote thrift and savings among members by accepting deposits and providing loans for mutual benefit.
How many members are required to form a Nidhi company?
A minimum of 7 members is required to form a Nidhi company, with at least 3 directors.
Under which law are Nidhi companies governed?
Nidhi companies are regulated under Section 406 of the Companies Act, 2013, and Nidhi Rules, 2014.
What is the minimum capital requirement for Nidhi companies?
Nidhi companies must have a minimum capital of ₹10 lakh.