7 Major Advantages of Nidhi Company Registration
A Nidhi Company is a kind of financial company which can be started with low capital investment. Hence, anybody willing to commence a Nidhi company is firstly supposed to acquire Nidhi Company Registration.
A Nidhi Company is
defined under Section 406 of the Companies Act, 2013 and Nidhi Companies Rules,
2014. The main objective of Nidhi Company includes instilling the habit of
saving money amongst its members and lending money to and receiving deposits
from its members only, for their common benefit.
A person with Nidhi Company Registration can avail several
advantages as discussed in this blog.
Top 7 benefits of Nidhi Company Registration
One of the biggest
advantages of Nidhi Company Registration is that it doesn’t require approval
from the Reserve Bank of India. However, RBI can give directions to the company
regarding the matters related to the acceptance of deposits.
Moreover, for being
the director of the Nidhi Company, you don’t need to satisfy any minimum
qualification eligibility criteria. A person with any qualification could be
the director of the Nidhi Company. When compared to NBFCs, the Nidhi Company
registration process is quite easy.
Apart from these, there are many other benefits of
registering a Nidhi Company. They are as follows:
1. Borrowing is Cheaper for these Companies
The members of the
Nidhi Company can borrow loans at a cheaper rate from their own company as
compared to borrowing from banks. This is one of the major benefits the members
of the Nidhi Company can avail when they are in need.
2. Encourages Savings
One of the aims of
Nidhi company registration is to cultivate the habit of saving among the
members of the company. Thus, to achieve mutual benefit, the Nidhi Company
lends to and borrows money from its members only.
3. Fewer Complications in Processing
Borrowing and lending
to known people, i.e. its members, where the procedure is fixed and less
complicated than that of the banks. A Nidhi Company registration lets its
members to evince the potential of their money and gain a lower rate of
interest when they are in need of money.
4. Limited RBI Regulations
As discussed above,
Nidhi Companies do not require any approval from the RBI for obtaining the
registration. However, RBI can issue some guidelines to the Nidhi Company such
as for accepting deposits; but they are limited.
5. Limited Capital Requirement
Ministry of Corporate
Affairs has mandated the minimum capital requirement of Rs. 5 Lakh for Nidhi
Company formation,which is comparatively low as compared to NBFCs.
6. Easy Formation
The process of Nidhi
Company formation is quite easy. They don’t require any approval from RBI,
unlike NBFCs do. Nidhi companies only need to incorporate themselves as a
public company with the Ministry of Corporate Affairs.
7. Lower Rate of Credit
The members of Nidhi
Company have the advantage of getting loans at a lower rate as compared to
banks. This, in turn, leads to greater savings amongst the members of the
company.
Concluding thoughts
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