Nidhi Company Registration

 Nidhi company is a public limited company which registered u/s 406 of companies act, 2013 and works as a boon in the financial sector. It is working like a mini bank. In India, Nidhi company has the sole power to take deposits from its members, in the form of F.D, R.D, D.D, M.I.S., etc.

It has the capabilities to open the saving A/c and to issue passbook to its members along with to facilitate the loan services like gold loan, silver loan, loan against any precious metal, loan against any immovable property, loan against any certificate i.e., the bond of insurance, fixed deposit, etc.

Deposits and Interest under nidhi company loan limit:

Let see about deposits and their interest rates under Nidhi company

    1. Nidhi Company can take deposits in the form of-

•      Fixed Deposits (F.D)
•      Recovery Deposits (R.D)
•        Daily Deposits (D.D)
•     Monthly Income Scheme (M.I.S) 

    2. Limits of Deposits-  

As per the Nidhi rules, 2014 a Nidhi company can take deposits 20 times of its net owned funds. Therefore, to understand the deposit limit, we have to understand first the calculation about Net Owned Funds (NOF)

Under Nidhi company rules 2014, net owned funds are calculated as follows-

               Particulars                                                                                   Rs.               

           Paid-up equity share capital                                                           xxxx

 (Add) Free reserve during the year                                                          xxxx       

(Less)  Accumulated losses                                                                      xxxx

 (Less) Intangible assists (like goodwill, trademark)                             xxxx                                                                

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 Net Own Fund                                                               XXXX

In the first year, in which the company is incorporated, the net owned fund will be the paid-up shares capital of the company. For example, if Nidhi company is incorporated with Rs. 5 lacs paid-up capital, the net owned fund will also Rs. 5 lacs at the initial stage, and the deposit limit of the company will be Rs. 1 cr (20 times of 5 lacs).

 3. Rate of interest-

As per Nidhi rules 2014, Nidhi company may offer the allocation interest rates on its deposits. As per the Nidhi provisions and companies act 2013, a Nidhi company can offer up to a maximum of 12% per annum. Interest rate to its members. This interest rate is more attractive in companies to other financial institutions including banks.

 In other words, we can say, it is a positive point or advantage for Nidhi company to attract more and more customers.

 

 

Loans and their interest rate under Nidhi and loan limit:

Nidhi company have the power to lend money in the form of secured loans only as per Nidhi rules 2014-

 

•  Loan against gold/silver/ any precious metal/ diamond-Nidhi company may take the security of gold/silver/any precious metal/ diamond against the loan, Nidhi company can provide loan to its members, equitant to or less than the value of gold/silver taken into security. 

• Loan against immovable property- Nidhi company can provide loans against immovable property for example loans against the building, plots, etc. In such cases, the value of the loan cannot be exceeded by 50 % of the total value of assets.

 

Rate interest under loan:

The rate of interest on the loan depends upon the maximum rate of interest offered on the deposits by the company. To calculate the interest rate on the loan. Let’s see the following table with an example-

S.no	Maximum rate offered on deposits	Margin rate	Interest rate on the loan
1.	If company has offered 12% on deposits	7.5%	19.5%
2.	If company has offered 10% on deposits	7.5%	17.5%
3.	If company offered has offered 8.5% on deposits	7.5%	16%

 

The margin rate is specified by the Nidhi rules, 2014, and cannot be changed.

 

Limits of the loan under Nidhi:

The limit of the loan under Nidhi is dependent upon the deposit limit. Let’s understand the following table:

S.no	Deposits amount	Loan limit (per member)
1.	If total deposits under Nidhi is less than 2 cr	Loan limit shall not be exceeded from Rs.2 lacs
2.	If total deposits are more than 2 cr but less than Rs. 20 cr	Loan limit shall not be exceeded from Rs 7.5 lacs
3.	If total deposits are more than 20 cr and less than Rs 50 cr	Loan limit shall not be more than 12 lacs
4.	If total deposits are more than 50 cr	Loan limit shall not be more than 15 lacs

 

Loans that are not allowed under Nidhi Company-

As per Nidhi rules 2014, the following types of loans cannot be provided under Nidhi Company Registration–

• Unsecured loan- Nidhi companies are not allowed to lend money in the form of unsecured loans i.e., personal loans, credit cards, etc.

• Loan against movable assets under Hypothecation- Nidhi companies are not allowed to lend money against any movable asset excluding jewelry/certification/bonds of F.D, R.D. For example-loan against any vehicle or vehicle finance, hire purchase, consumer loan, etc.

 

Conclusion:

Nidhi companies are made for deposits and secured loan facilities. All types of unsecured loans are restricted and Nidhi companies. Further, all the above words are the thoughts of the author which does not accept any loss/liabilities.

 

About the author:

This article is written by advocate Satender Saini, who is professionally associated with Vakilkaro. For any query regarding Nidhi company, connect with us at satender@vakilkaro.co.in  and call us at 9828124053.

 

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