A nidhi company, is one that belongs to the non-banking Indian finance sector and is recognized under section 406 of the Companies Act, 2013.Their core business is borrowing and lending money between their members. They are also known as Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company. They are regulated by Ministry of Corporate Affairs. Reserve Bank of India is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, in recognition of the fact that these companies deal with their shareholder-members only. Nidhi means a company which has been incorporated with the object of developing the habit of thrift and reserve funds amongst its members and also receiving deposits and lending to its members only for their mutual benefit. Nidhi companies existed even prior to the existence of companies Act 2013.Is it necessary that every NBFC should be registered with RBI?
In terms of Section 45-IA of the RBI Act, 1934, no Non-banking Financial company can commence or carry on business of a non-banking financial institution without a) obtaining a certificate of registration from the Bank and without having a Net Owned Funds of ₹ 25 lakhs (₹ Two crore since April 1999). However, in terms of the powers given to the Bank, to obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz. Venture Capital Fund/Merchant Banking companies/Stock broking companies registered with SEBI, Insurance Company holding a valid Certificate of Registration issued by IRDA,Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982,Housing Finance Companies regulated by National Housing Bank, Stock Exchange or a Mutual Benefit company."References www.rbi.org.in"Does the Reserve Bank regulate all financial companies?
No. Housing Finance Companies are regulated by National Housing Bank, Merchant Banker/Venture Capital Fund Company/stock-exchanges/stock brokers/sub-brokers are regulated by Securities and Exchange Board of India, and Insurance companies are regulated by Insurance Regulatory and Development Authority. Similarly, Chit Fund Companies are regulated by the respective State Governments andNidhi Companies are regulated by Ministry of Corporate Affairs, Government of India. Companies that do financial business but are regulated by other regulators are given specific exemption by the Reserve Bank from its regulatory requirements for avoiding duality of regulation."References www.rbi.org.in"Governing Law
Nidhi companies is governed by Nidhi Rules, 2014. They are incorporated in the nature of Public Limited company and hence, they have to comply with two set of norms, one of Public limited company as per Companies Act, 2013 and another is for Nidhi rules, 2014. No RBI approval is necessary to register the company, as RBI has specifically exempted this category of NBFC in India to comply its core provisions such as registration with RBI etc.Nidhi’s go under one class of NBFCs, the RBI is enabled to issue directions to them in matters identifying with their deposit acknowledgment activities. In any case, since Nidhi’s manage their shareholder-members just, RBI has exempted such told firms from the center provisions of the RBI Act and different directions material to NBFCs. As on date (February 2013), RBI does not have any specified administrative structure for Nidhis.
~ A Nidhi or Mutual Benefits enlisted under Section 620A(1)of Companies Act, 1956
~ Each organization working on the lines of a Nidhi organization or mutual benefit society yet has either not applied for or has applied for and is anticipating warning to be a Nidhi or Mutual Benefit Society under Section 620A(1)of Companies Act, 1956.
~ Each organization incorporated as a Nidhi concerning the provisions of Section 406 of the Companies Act, 2013.