Nidhi companies are non-banking financial companies (NBFCs) that are primarily formed for the purpose of accepting deposits from their members and providing loans to their members only.
Rules for Nidhi Company Accounting and Maintenance:-
Nidhi companies are governed by the Companies Act, 2013, and the rules for accounting are as follows:
- Maintenance of Accounts: Nidhi companies are required to maintain proper books of accounts in accordance with the accounting standards issued by the Institute of Chartered Accountants of India (ICAI).
- Financial Statements: Nidhi companies are required to prepare and file their financial statements with the Registrar of Companies (ROC) annually. The financial statements include the balance sheet, profit and loss account, cash flow statement, and notes to the financial statements.
- Audit of Accounts: Nidhi companies are required to get their accounts audited by a chartered accountant at the end of each financial year.
- Deposit Accounts: Nidhi companies are required to maintain separate accounts for each member’s deposit and interest earned on those deposits.
- Loan Accounts: Nidhi companies are required to maintain separate accounts for each loan given to a member, including the amount of the loan, interest rate, and repayment schedule.
- Cash Transactions: Nidhi companies are required to maintain a cash book to record all cash transactions, including receipts and payments.
- Non-Performing Assets: Nidhi companies are required to classify loans as non-performing assets (NPAs) if they remain overdue for more than 90 days. Nidhi companies must maintain a provision for bad and doubtful debts as per the Reserve Bank of India (RBI) guidelines.
- Compliance with RBI Guidelines: Nidhi companies must comply with the guidelines issued by the RBI regarding deposit-taking activities, lending activities, and other regulatory requirements. Make e-Nidhi Registration today With Our Experts!
Why e-Nidhi Company is Best?
Nidhi companies can be a good option for certain types of businesses and investors, as they offer several benefits:
- Limited Liability: Members of a Nidhi company have limited liability, which means their personal assets are protected in case the company faces financial difficulties.
- Lower Minimum Capital Requirement: Nidhi companies have a lower minimum capital requirement compared to other types of NBFCs.
- Limited Operations: Nidhi companies are limited in their operations, as they can only accept deposits from their members and provide loans to their members. This can make it easier to manage the business and reduce regulatory compliance requirements.
- Higher Interest Rates: Nidhi companies can offer higher interest rates on deposits to their members, which can attract more customers.
- No External Shareholders: Nidhi companies do not have external shareholders, which means the company can focus on the interests of its members and is not influenced by external stakeholders.
- Membership Base: Nidhi companies rely on a membership base, which can provide a stable source of funding for the company.
- Easy Registration: Nidhi companies are relatively easy to register and have fewer compliance requirements compared to other types of NBFCs.
In summary, Nidhi companies must maintain proper books of accounts, prepare and file financial statements, get their accounts audited annually, maintain separate accounts for deposits and loans, record all cash transactions, classify loans as NPAs if overdue, maintain provisions for bad and doubtful debts, and comply with RBI guidelines.