NIDHI COMPANY

Nidhi company, unlike other companies, works for the mutual benefit of its members. Nidhi company is the one that manages and looks after deposits from and loans to its members only, and it works for the mutual benefits of its members/shareholders. Accordingly, various exemptions have been provided to these companies in respect of annual compliance and taxation.

The main aim of incorporating a Nidhi Company is to promote savings among its members. The funds, which are contributed to Nidhi company comes only from its shareholders and are to be used only by the shareholders of the Nidhi Company. The word "Nidhi" stands for "treasure" in the Hindi language, due to which "Nidhi" was used for terming such companies.

Nidhi Company can come under a certain category of NBFC. It is not directly regulated by the RBI. However, RBI still has the power to issue directives to Nidhi companies related to their deposit acceptance activities. They have been exempt from the core provisions of the RBI Act and other directions applicable to NBFCs since Nidhi company deal with their shareholders only. Therefore, Nidhi Company is an ideal legal entity to take a deposit from and lend to a specific group of people.

Compliance that Nidhi Company needs to take care of:

NDH-1 Form: This form consists of the data of the members which has to be submitted within 90 days from the end of every financial year

NDH-2 Form: If Nidhi company is not able to add 200 members in its first financial year then it can request MCA for an extension through this Form.

NDH-3 Form: This form acts as a half-yearly return form which is also required to be filed.

Annual Returns with ROC: Annual Returns with MCA have to be filed to MCA through Form MGT-7.

P&L Statement and Balance sheet: The financial statements and other related documents are to be submitted annually, in Form AOC-4.

Income Tax Returns: Nidhi Company also needs to file its Annual Income Tax Returns.

Deposits under Nidhi Company

->Nidhi can deposit a maximum of 20times of the funds that are invested.
->Moreover, Deposits under Nidhi company are classified into 3 types.
-Savings
-Fixed Deposit
-Recurring Deposit.
->Under Nidhi, on FD & RD maximum interest of up to 12.5% and on savings account 6%.


Loans from Nidhi Company

Under security deposit of Gold, Property, FD, etc. Loans can be provided.
Nidhi company are liable to take legal action if any member fails to repay any sum of money.