Counsel

Nidhi means a Company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.

A Nidhi to be incorporated under the Act is a public company and has a minimum paid up
equity share capital of five lakh rupees. Features of Nidhi Company:

1) No Nidhi shall issue preference shares. 

2) No Nidhi shall have any object in its Memorandum of Association other than the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutualbenefit.

3) Every Company incorporated as a “Nidhi” shall have the last words ‘Nidhi
Limited’ as part of its name. 

4) Not less than two hundred members;

5) Net Owned Funds of ten lakh rupees or more;

6) Unencumbered term deposits of not less than ten per cent. of the outstanding deposits as specified in rule 14; and

7) Ratio of Net Owned Funds to deposits of not more than 1:20.

8) Within ninety days from the close of the first financial year after its incorporation, the second financial year, Nidhi should file a return of statutory compliances in Form NDH-1 along with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 with the Registrar duly certified by a company secretary in practice or a chartered accountant in practice or a cost accountant in practice.

General restrictions or prohibitions.- No Nidhi shall-
(a) carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;

(b) issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;

(c) open any current account with its members;

(d) acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi

(e) carry on any business other than the business of borrowing or lending in its own name: Provided that Nidhis which have adhered to all the provisions of these rules may provide locker facilities on rent to its members subject to the rental income from such facilities not exceeding twenty per cent. of the
gross income of the Nidhi at any point of time during a financial year. 

(f) accept deposits from or lend to any person, other than its members;

(g) pledge any of the assets lodged by its members as security;

(h) take deposits from or lend money to any body corporate;

(i) enter into any partnership arrangement in its borrowing or lending activities;

(j) issue or cause to be issued any advertisement in any form for soliciting deposit:Provided that private circulation of the details of fixed deposit schemes among the members of the Nidhi carrying the words “for private circulation to members only” shall not be considered to be an advertisement for soliciting deposits.

(k) pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans.

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