Why is nidhi company so important. what are its advantages

The literal meaning of Nidhi is ‘Treasure’ and in the financial market, however, Nidhi Company means a company which tries to cultivate the habit of saving by accepting deposits and providing loans amongst its members.

Hence, the nature of the company is exactly the same as it sense and starting a Nidhi company is undoubtedly will be a good way out for you to start a financing company.

In this write- up we will discuss the benefit of starting a Nidhi company in India –

Very Easy formation

• Requires only 7 persons where 3 will be appointed as Director.
• Less documentation to do.
• Simple Registration process.
• Hardly take 10 to 15 days to get it register.

Nidhi company registration is very simple and the level of complexity as compared to other types of finance companies like NBFC is minimal in Nidhi Company.

Cost Efficient Registration

Registering Nidhi Company comes with the pocket-friendly cost. The minimum capital requirement for registration of Nidhi Company is Rs 5,00, 000 lakh which you can invest within 2 months after getting your Nidhi Company registered.

For registration of Nidhi Limited, you can reach at www.hubco.in where you will find an economical price for Nidhi registration and get the registration of Nidhi company in a very cheaper price.

No RBI Regulations – less compliance.

Nidhi Company by its nature of activity comes under the category of NBFC but does not require RBI approval. These companies follow Nidhi Rules, 2014 issued in respect of the activity and working of the company. RBI has exempted Nidhi Company from following stringent compliances so you don’t need to be in rush-n- hush as RBI will not bother if you starting a Nidhi Company in India.

More Certainty in Nidhi company

In India, everyone likes to do the savings for six years old child to sixty years old man. And, the main objective of Nidhi company is to promote the habit of saving amongst its member which means it is certain and going concern business as the members will not stop savings anytime.

Less level of Risk - Non- payment loans

It is very clear that Nidhi Company can accept deposit and provide loans to its members only according to the Nidhi Rules, 2014 which means the risk of non- repayment of loans is less as compared to other finance business. It is the safest route for lending loan and the loans given to members are at very low rates in comparisons with other providers which again bring greater savings amongst members.

Net owned fund- Invest one get twenty

Net owned fund means the amount of capital invested by owner in its business for raising funds. The net owned fund ratio of Nidhi Company is 1:20, which means you invest one rupee and raise the deposit of twenty rupees.

Nidhi Encourages its members to save more money and making good use of the available money. Nidhi Company is a clause of Non Banking Financial Company which is recognized under Section 406 of The Company Act 2013 and governed by Nidhi Rules 2014. ... Another Benefits of Nidhi Company is high rate interest of 7.5%.
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What are the advantages and disadvantages of a Nidhi company?

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4 Answers



Sushma Gowda, SEO Executive (2018-present)

Answered July 11, 2018

Nidhi Company represents a Mutual Benefit Companywhich is also called as Mutual Benefit Fund, Permanent Fund and Benefit Fund. Object of Nidhi Company is to develop the habit of using money carefully and saving wisely among its members. Nidhi Encourages its members to save more money and making good use of the available money. Nidhi Company is a clause of Non Banking Financial Company which is recognized under Section 406 of The Company Act 2013 and governed by Nidhi Rules 2014.

Here are few Advantages of Starting Nidhi Company In India:

Minimum paid up capital requirement of Nidhi Company is very low compared to other Non Banking Financial Companies. You just need 5,00,000/- and 7 members to get started, That’s an ease for all.

You don’t need to wait for a RBI Licence. Nidhi Company is the only loan company in India which can be started without RBI Approval/Licence. The Registration process is easy and can be done in 15 to 20 days.

Trusted 3 people (almost from same family) will be selected as directors, their PAN, Photo, ID, Address proof and any authorized proof of registered office is all you need for registration it’s that simple.

Another Benefits of Nidhi Company is high rate interest of 7.5%. And Nidhi Company can earn max 20% interest on loans in reducing balance method .

In simple sense. ,you can compare nidhi company with credit co-operative society, Moreover to give a corporate environment to credit cooperative societies ,with time bound filing to ROC ,and much disclosures the Nidhi company ,concept is established,because ,in recent times lot of frauds/ malpractice found in cooperative societies.