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The key differences between NBFCs and Nidhi Companies in India are as follows:
Meaning
Non-banking financial companies (NBFCs) and banking institutions are the two categories into which all businesses in India fall. It is not an NBFC like the others in that it does not accept deposits from the public or provide loans to them. One of the most significant differences between NBFCs and Nidhi Companies is this.
Functions
A further contrast between Nidhi Companies and NBFCs is that the former are not allowed to engage in specific business activities such as chit-fund operations, hire purchase financing, leasing finance, insurance, or the purchase of assets issued by corporate organizations. On the other hand, non-bank financial companies, or NBFCs, are financial institutions that carry out a range of activities such as lending, advances, buying stocks or shares issued by the government or local authorities, leasing, hire-purchase, and insurance.
Membership
They are only able to lend or take deposits from active members or shareholders. Consequently, you have to join a Nidhi Company to transact with them. However, NBFCs may accept public deposits for a minimum of 12 months and a maximum of 60 months. This represents yet another important way that NBFCs and Nidhi Companies differ from one another.
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Nidhi Companies are also not allowed to advertise their deposit-accepting services. Notwithstanding, non-bank financial businesses (NBFCs) possess the authorisation to advertise their lending, depositing, and other financial transaction services.
Service Charges
Nidhi Companies are not permitted to charge any kind of service charge to members in return for joining or issuing shares. However, they can charge processing fees for loans. Interest rates that are greater than the Reserve Bank of India’s ceiling cannot be charged by NBFCs.
Branches
A Nidhi Company cannot create branch offices unless it has demonstrated three years of continuous profitability. NBFCs, however, are exempt from these restrictions and can open branches without any trouble at all.
Final Thoughts
Therefore, it is critical to understand the many ways in which NBFCs and Nidhi Companies differ from one another. By focussing on providing financial services exclusively to its members or owners, Nidhi Companies promote a close-knit community approach. But NBFCs are more accessible, offering a wide range of financial services to the general population. In situations like these, NBFCs step in to save the day.
What else can I help you with?
What is a Nidhi company?
Nidhi company is a company registered under Companies Act and notified as a nidhi company by Central Government under Section 620-A of Companies Act. It is a non-banking finance company doing the business of lending and borrowing with its members or shareholders.
How do you registerd a nidhi company under section 620-A of companies act?
In order to register as a nidhi company in India under section 620-A of companies act, you will have to apply at the Ministry of Corporate Affairs headquarters.
Is NIDHI is under the RBI?
NIDHI, which stands for "Nidhi Company," is not directly under the Reserve Bank of India (RBI). Instead, it is regulated by the Ministry of Corporate Affairs under the Companies Act, 2013. Nidhi Companies are primarily formed for the mutual benefit of their members, focusing on savings and loans among themselves. However, they must adhere to certain guidelines set by the RBI concerning their financial operations and practices.
How a Nidhi company is formed in India?
Nidhi Companies are Companies notified by the Central Government as such under Section 620A of the Companies Act, 1956.These Companies mainly engage in the business of collecting deposits in the form of Savings Deposit, Recurring Deposit etc.... and also lend to the same to the members of the Company. One of the important feature of a nidhi Company is that it deals only with members (share holders). Thus if you want to deposit any amount in a nidhi Company or want to avail a loan from a Nidhi Company, first you have to become a member by subscribing to shares of the Company.Moreoover, Nidhi Companies can open SB Accounts for its members. Moreover, there are certain restrictions like a Director can hold office for a contimuos period of 10 years only and an Auditor for a period of 5 years.Warm RegardsBirendra Banka9661805650
What are the key Advantages of a Nidhi Company in India?
Following are the key advantages of a Nidhi Company in India: Encouragement of Savings and Thrift: Nidhi companies are specifically designed to foster thrift and saving practices among their members. They offer a platform for people to save and invest their money, creating a culture of financial discipline and responsibility. Credit: Nidhi companies lend to their members, which can be especially advantageous for individuals who do not have easy access to formal financial institutions. Members can borrow money for a variety of reasons, such as small enterprises, education, and crises. Local Economic Development: Nidhi companies are frequently found in semi-urban and rural locations where access to financial institutions is limited. Nidhi companies contribute to the economic development of these regions by offering financial assistance to local inhabitants and businesses. Financial Inclusion: Nidhi companies play an important role in financial inclusion by reaching out to underbanked and unbanked populations. They provide services to those who may not have access to traditional banks, eliminating financial inequality. Building Community: Nidhi companies are often member-driven, generating a feeling of community among their members. This can lead to enhanced community trust and collaboration, which can be good for social and economic development. Ease of Membership: Joining a Nidhi company is frequently easier than following the rigorous standards of regular banks. This makes it easier for people to join and profit from their services, especially in remote areas. Limited Government Intervention: While Nidhi companies are regulated by the government, they generally face fewer regulatory constraints than traditional financial institutions. This gives them greater flexibility in meeting the demands of its members. Transparency and Accountability: Nidhi companies must keep correct financial records and make frequent reports to regulatory authorities to ensure transparency and accountability in their operations. Affordability: Nidhi companies frequently have streamlined operational structures, lowering the costs associated with maintaining a financial institution. Members may benefit from cheaper fees as a result of this. Support for Small and Micro Businesses: Nidhi companies typically lend financing to small and micro-enterprises, assisting in their growth and sustainability. This has the potential to significantly promote local entrepreneurship and employment creation. Liquidity Management: Nidhi companies assist members in managing their liquidity requirements. Members can access their funds as needed, creating a financial safety net for unforeseen emergencies. While Nidhi companies provide several advantages, they are also subject to stringent regulatory regulations and Compliance to protect the safety of members’ funds and the overall integrity of the organization as a whole. By adhering to these standards, Nidhi companies can continue to provide these benefits to their members while also positively contributing to India’s financial inclusion and economic development. Now let’s discuss the Nidhi Company Compliance.
Nidhi Rao?
Nidhi Rao
When was Bimalendra Nidhi born?
Nidhi Buley was born in 1986.
What is the meaning of name nidhi?
nidhi means money
Who is nidhi?
Nidhi is a name. It means " treasure" in Hindi. It is NOT a person.
When was Nidhi Razdan born?
Nidhi Razdan was born in 1978.
When was Nidhi Eoseewong born?
Nidhi Eoseewong was born in 1940.
How tall is Nidhi Bagri?
Nidhi Bagri is 5' 6".
