A Nidhi Company is a business entity incorporated under the companies act. Promoting the habit of thrifts and savings among the members, this business entity can only be incorporated as a private limited company.
The Banks and NBFCs of India, although valuable for the middle-class, bring nothing but misery to the lower classes. Consisting of several rules and regulations that deter low-income groups from creating wealth, these entities are slowly losing steam in the market.
However, while they lose relevance, another type of business entity called a Nidhi Company is gaining it. A business entity that one can register under the Companies Act, 2019, this business entity is publicly-held. Furthermore, it aims to specifically cater to the lower-income groups – providing them lending and saving facilities without much legal red tape to deter them.
This is just one benefit of Nidhi Company Registration. Read the rest to know about the remaining benefits.
What do you gain upon registering a Nidhi Company in India?
Here are the perks that you get after successfully establishing this business entity:
You can form it very easily
When you hear the term, public limited company, you often start thinking about all the complications surrounding it. However, with this business entity, a complex process is the last thing you need to worry about. It is because:
- You need less number of documents.
- The registration process is simple.
- And the process hardly takes more than 15 days.
It is not Costly
A Nidhi Company is perhaps the cheapest form of a public limited entity. All you need is the initial capital of INR 5,00,000/- (a small amount during this day and age) that you can invest over the course of two months, and you will fulfill the primary criteria to own a Nidhi Company.
Away from RBI regulations
Nidhi Company is a Financial business entity that doesn’t exist under the Reserve bank of India. It means that you won’t have to hamper your business by worrying about complex RBI regulations. As the regulatory leash around your business is loose, you have a certain level of independence in conducting your business. Read More: Nidhi Company Registration
Less risk for non-payment of loans
As per the Nidhi Rules, this company can only engage with its members to accept deposits and lending loans. And thus, the risk of non-payment of the loans is low. The reason behind it is that the members have a stake in your business and their success relies on yours. This symbiotic factor stops them from getting away with non-repayment of loans.
Earn twenty times more than the investment
According to the Nidhi Rules, a Nidhi Company has to maintain a net owned fund ratio of 1:20 all year. It means that for every rupee you invest, the deposit has to be twenty rupees. While it is a financial state that you have to maintain each financial year, doing it continuously will turn this rule into a benefit.
Why are these benefits critical for the Startup sector of India?
Everything within the star-up sector of India hinges on ensuring that lower-income groups also have access to its advantages. These benefits that we have mentioned are the core reasons behind the rise in the number of Nidhi Company Registrations. Everyone who seeks to do a lot more than just earning money is either choosing this or a section 8 company. The latter, however, is only for Non-Governmental Organizations.
Thus, if you want to help people while still earning a fair bit of profits, incorporating a Nidhi Company is the best thing that you can do for your business.
Conclusion
When you register a Nidhi Company, you get a lot more than you wanted to have.
Not only is the process of incorporation easy, but the lack of overbearing regulations make it easy for you to do business in India.
Additionally, the risk-free loan aspect is one that one should always consider as a worthy aspect.
Nidhi Company Registration can yield many benefits for your business. Read this article to understand the nature and the importance of these perks.
