Nidhi Company Operations in India

Nidhi companies are a type of non-banking financial institution (NBFC) that operate in India. They are regulated by the Ministry of Corporate Affairs (MCA) and are primarily involved in accepting deposits and providing loans to their members.

Some of the key features of Nidhi companies in India include:

1. Membership-based: Nidhi companies are typically formed as mutual benefit societies and operate on the principle of "members helping members". Only individuals or groups of individuals can become members of a Nidhi company, and each member must hold at least one share in the company.

2. Limited activities: Nidhi companies are only allowed to engage in a limited range of activities, which include accepting deposits and providing loans to their members. They are not allowed to carry out any other financial activities like investment or trading.

3. Limited liability: Nidhi companies are generally structured as limited liability companies, which means that the liability of members is limited to the extent of their shareholding in the company.

4. Minimum capital requirement: Nidhi companies are required to have a minimum net owned fund (NOF) of Rs. 10 lakhs at all times. They are also required to maintain a certain ratio between their NOF and deposits.

5. Regulatory framework: Nidhi companies are regulated by the MCA and must comply with various regulations and guidelines issued by the ministry from time to time. They are required to submit regular reports and returns to the Registrar of Companies (RoC).

In summary, Nidhi companies in India are niche NBFCs that operate on the principle of mutual benefit. They are subject to strict regulations and must comply with various requirements relating to membership, activities, capital, and reporting.

Author - Albert Allu