Are the Deposits in a Nidhi Company Safe?

Deposits in a Nidhi company is safe and secure because the Ministry of Corporate Affairs, Government of India and Reserve bank of India has framed rules and regulations to ensure the safety and security of Deposits in a Nidhi Company which includes maintaining prescribed SLR(Statutory Liquidity Ratio). A Nidhi company in order to operate has to strictly comply with these rules and regulations. Financial records of the company are audited regularly by a certified professional Auditor and reports are submitted to the statutory bodies to ensure compliance and good health of the company. To ensure transparency, audited Annual Financial Reports of the company is presented before its members by the management in an event called AGM (Annual General Meeting), where members can interact with management and can also raise their concerns if any. As per the guidelines, it is mandatory for a Nidhi company to conduct AGM once in a year. Moreover, a Nidhi company can grant only secured loans to its members, and all such loans granted shall have the protection of insurance coverage.

What are the documents required for becoming a member in a Nidhi Company?

Nidhi Company may allot new shares to its members as par the provisions of the Companies Act, 2013. There is present exemption through which section of right issue and private placement is not applicable to Nidhi Company, so the shares can directly be allotted by Board of Directors of the Company through a resolution passed. Every Nidhi shall issue equity shares of the nominal value of not less the 10 rupees each to any person who wish to enrol as member in a Nidhi Company. For term deposit holders, at least 10 equity shares or shares equivalent to Rs.100/- is to be allotted. To abide by the KYC (Know Your Customer) Policy of RBI, each member shall produce one document of identity proof (Such as Ration Card with photo, Driving License, PAN Card, Voter ID card, Passport, Aaadhar Card etc.) and one document of residential address proof (Such as Aaadhar Card, Driving License, Voter ID card, Passport, Telephone Bill, Electricity Bill, Water Bill, Bank account Statement.)

What is the maximum rate of interest that can be offered by a Nidhi company on Fixed Deposits? What is the tenure of such deposits?

As per the guidelines issued by Ministry of Corporate Affairs, Government of India, the maximum rate of interest offered by Nidhi Company on Fixed Deposits shall not exceed the maximum rate prescribed by Reserve Bank of India (RBI) which the Non-banking Financial Companies can pay on their public deposits. At present, the maximum rate of interest an NBFC can offer is 12.5%.

Fixed Deposits shall be accepted for a minimum period of six months and a maximum period of sixty months.