NIDHI COMPANY

FREQUENTLY ASKED QUESTIONS :

A Nidhi company is a type of Non-Banking Financial Companies (NBFCs), which does not require any license from the Reserve Bank of India (RBI).

It is formed for the sole purpose of accepting deposits and lending loans to its members only.

No. A Nidhi company is registered as a Public Limited company with minimum 3 directors, 7 subscribers and a minimum paid up capital of Rs.10 lacs. The sole objective of the Nidhi company is receiving deposits from and lending to its members only for their mutual benefits.

A Nidhi company cnanot to accept deposits of more than 20 times of its Net Owned Funds as per its last audited financial statements.

Only shareholders/Members of the Nidhi Company, who have a membership ID, can invest in the scheme.

A Nidhi Company can open 3 branches in its district, only if it has earned profits after tax consistently during the preceding three financial years. For any additional branch, it will first have to apply for approval from the Regional Director.

Nidhi Companies are not allowed to provide or give unsecured loans to its Members and is not allowed to do Micro Finance Business and hence is only allowed to lend secured loans to its Members only.

This type of loan is not allowed under Nidhi Company. Vehicle finance is allowed to Non-Banking Financial Companies (NBFC) in India.

No. A Nidhi company cannot issue preference shares.

Yes. Every director of the Nidhi company shall be the member of the company.

The director of a Nidhi company holds office for a period of 10 consecutive years. After the expiry of this term, he can be re-appointed in the same nidhi company after a gap of 2 years from the date of expiry of 10 years.

Yes. Every deposit holder shall hold atleast 10 equity shares or shares of value Rs.100.

Yes. A Nidhi company can declare dividend up to 25% of the capital. It shall take approval from the Regional Director for declaration of dividend exceeding 25%.

No. Nidhi companies are not allowed to acquire the shares of any other company, nor they are allowed to control the management of any other company.

A Nidhi company shall have atleast 200 members within 1 year from the date of incorporation of the company. If Nidhi company fails to appoint 200 members within the said time period then it can take extension of time from the Regional Director.