Unencumbered term deposits are like special savings accounts in Nidhi Companies. They are not tied up by any legal issues, which means the company can use the money freely. This is important because Nidhi Companies are all about helping members save money and get loans easily.
Why Are They Important?
These deposits are a key part of how Nidhi Companies work. They provide a reliable pool of money that the company can lend to its members. Since there are no legal limits on these funds, Nidhi Companies can operate smoothly and help their members with financial needs without any hassle.
Starting a Nidhi Company: What You Need to Know
Starting a Nidhi Company is a great way to promote saving and lending among its members. Here’s what you need to get started:
- Gather a Team: You’ll need at least seven people to start. Out of these, three will take on the role of directors.
- Name Your Company: Make sure your company’s name includes ‘Nidhi Limited’. It should be registered as a public company.
- Know Who Can Join: Minors, other companies, and trusts cannot become members of a Nidhi Company.
- Raise Your Capital: Your company should have a minimum of ₹5 lakh in share capital, and it must be fully paid up.
- Check Your Finances: If your company hasn’t made a profit in the last three years, you can’t open new branches.
- Set Fair Interest Rates: The interest on loans should not exceed 7.5% above the highest deposit rate offered.
- Handle Shares with Care: Any preference shares issued before the company was established must be paid back.
- Encourage Savings: The main goal is to encourage members to save money.
Remember, these steps are just the beginning. Following them will help ensure your Nidhi Company starts on the right foot.
Key Steps After Starting a Nidhi Company
Once you’ve set up your Nidhi Company, here’s how to keep it running smoothly:
- Expand Your Circle: Aim to have at least 200 members within the first year.
- Build Your Funds: Your company should have at least ₹20 million in net-owned funds.
- Maintain a Healthy Balance: The amount of your net owned funds should never be more than 20 times your deposits.
- Secure Your Deposits: Keep at least 10% of your deposits as unencumbered term deposits.
- Keep Good Records: Maintain your books of accounts and statutory registers diligently.
- Meet Regularly: Hold the meetings that the law requires for your company.
Special Rules for Nidhi Companies
Your Nidhi Company enjoys some unique benefits:
- Enjoy Exemptions: You’ll get certain breaks from the usual rules under the Companies Act, 2013.
- Serve Notices Easily: You can send legal notices to members through various methods, including mail or courier.
- Private Placements: Offering private placements doesn’t mean you’re making a public offer.
These guidelines will help ensure your Nidhi Company complies with regulations and thrives.
Understanding the Deposit Refund Policy for Nidhi Companies
When you’re managing a Nidhi Company, it’s important to know how to handle the money that your members trust you with. Here’s a simple guide to the deposit refund policy:
- Keep Deposits in Check: Your company can’t accept deposits more than 20 times it is not owned assets as per the latest financial statements.
- Fixed Deposit Terms: You can have fixed deposits for a period between 6 months and 5 years.
- Recurring Deposit Terms: If members want to save little by little, they can do so for 12 to 60 months.
- Loan-Linked Deposits: When you give a loan, the related recurring deposit can’t last longer than the loan’s repayment time.
- Interest on Savings: The interest you give on savings can’t be more than **2% above** what national banks offer, and it’s capped at ₹1,00,000.
- Paying Interest: The interest rate on fixed and recurring deposits should not be higher than the maximum rate the RBI allows for NBFCs.
- Safekeeping Funds: At least 10% of your deposits should be safely kept in a bank or post office in the company’s name.
- Emergency Withdrawals: If you need to pay back depositors quickly, you can withdraw some funds with the Regional Director’s okay, but you have to put the money back to keep the 10% limit.
By following these rules, you’ll make sure that your Nidhi Company is a safe place for members to save and borrow money.
Loan Guidelines for Nidhi Company Members
If you’re a member of a Nidhi Company, here’s what you need to know about getting a loan:
- Who Can Borrow: Only members of the Nidhi Company can apply for a loan.
- Loan Limits Based on Deposits:
- If total deposits are less than ₹2 crores, members can borrow up to ₹2,00,000.
- For deposits between ₹2 crores and ₹20 crores, the borrowing limit is ₹7,50,000.
- When deposits are between ₹25 crores and ₹50 crores, members can borrow up to ₹12,00,000.
- If deposits exceed ₹50 crores, the maximum loan amount is ₹15,00,000.
- Acceptable Collateral:
- Gold, Silver, and Jewelry: Loans against these can be given for up to one year.
- Real Estate: You can borrow up to 50% of the property’s value, with a repayment period of up to seven years.
- Securities and Policies: Government-backed securities or insurance policies can also be used as collateral.
- Interest Rates: The interest charged will be a declining balance rate, not exceeding 7.5% above the highest deposit interest rate offered by Nidhi.
Remember, these rules are designed to keep the borrowing process fair and manageable for all members.
Filing Returns for Your Nidhi Company: A Simple Guide
When you run a Nidhi Company, you need to keep the government updated on your financial activities. Here’s how to do it without any hassle:
- First Things First: Within 90 days after your first financial year ends, file Form NDH-1. This form shows you’re following all the rules and should be certified by a professional like a Company Secretary, Chartered Accountant, or Cost Accountant.
- Need More Time?: If you can’t meet these requirements in the first year, don’t worry. Just ask for more time by submitting Form NDH-2 to the Regional Director with the necessary fee.
- Twice a Year Reporting: Every six months, you have to submit Form NDH-3. Do this by **April 30** for the period ending March 31 and by **October 30** for the period ending September 30. This form includes details about the loans you’ve given and the deposits you’ve received.
- Annual Compliance: Don’t forget to file the e-form NDH-4 within a year of starting your company or within six months of the Nidhi (Amendments) Rules, 2019, whichever comes later. This shows you’re in line with Rule 3A of the amendments.
By sticking to these steps, you’ll ensure your Nidhi Company stays on the right side of the law and builds trust with its members.