How to get loans under Nidhi Scheme?

Nidhi Companies have turn out to be a growing trend in India. Small financers are being benefitted to a great extent by incorporating Nidhi Company. A Nidhi Company needs a low capital, few members and some documents for its incorporation. Given that, such companies are incorporated only for the mutual benefits of its shareholders or members, so there is low level of risk as there will be no external factors. In this blog, we have enclosed everything you need to know regarding Loans under Nidhi Scheme. 

Source of Funding for Nidhi Company

 The major source of funding for a Nidhi company comes from its shareholders or members in the form of deposits. Loans are provided by the Nidhi Company at moderately reasonable rates to its members for house maintenance, or construction. After Nidhi Company Registration, they are governed by Companies Act, 2013, Nidhi Rules 2014 and several of the financial activities of Nidhi Scheme are administered by The Reserve Bank of India Act, 1934. The Nidhi Companies are mostly formed to encourage people to absorb the habit of savings so that the members can easily overcome the challenge of financial needs, when the need occurs. 

Loans under Nidhi Company

 The Nidhi Companies offer loans and accept deposits from its shareholders or members only. Under Nidhi Scheme, there are several provisions of the loans which are governed by them. The sum of interest which is charged on loans under the scheme must amount to at least the rate of interest as prescribed by the RBI. 

Loans under Nidhi Scheme

 The following points must be kept in mind while providing loans under the Nidhi Scheme- 

• Before getting approval of Ministry of Corporate Affairs or Department of Commerce of either the State or Central Government is required to give loan;
• There are limits set on the amount of loan provided. If the total deposits of a Nidhi Company is below INR 2 crores, then a maximum loan of INR 2 lakh will be given;
• A Nidhi Company can advance a loan up to INR 15 lakh, if the total amount of deposits is more than INR 50 crores;
• A Nidhi Company is solely incorporated for mutual benefits of its shareholders or members only. Loans offered under the Nidhi Company will be given only to its shareholders or members and not to any corporate bodies;
• There are several restrictions on loans to be offered against securities. It can provide loan only against the securities which is stated in the provision. As per the laws, Nidhi Companies are not allowed to lend any unsecured loan.

Securities under Nidhi Scheme

 Following are the securities under Nidhi Scheme under which the company can give loans:-

• Security against Gold, Silver and Jewellery

 This type of loan is very renowned amongst the people and it is particularly known as gold loan. The repayment period of such loans must not surpass one year. The total assessment of such loans must not surpass the 80 percent of the total value of silver or gold. 

• Security against Immovable Property

 This type of loan is recognized as loan against Immovable Property. The repayment period of such loans must not surpass seven years and the repayment of this type of loan must not surpass 50 percent. 

• Security against FD receipts, NSC, Insurance policies and Government securities 

 This type of loan is not very renowned among the community. Nevertheless, in the case of loan against FD, the period of loan must not surpass the unexpired period of the FD. 

Other significant Circumstances under Nidhi Scheme

 Other occasions under Nidhi Scheme regarding loans are as follows- 

• The security or guarantee for advancement of loans is given by the company whilst the credit is delivered to a Subsidiary Company from the financial institution.
• If a Nidhi Company is not making profit for the three consecutive financial years, then no new loans above 15% can be acquired by the members. Those members who have defaulted on a loan taken from Nidhi Company are not allowed to take credits.
• Only the members or the representatives of the Nidhi Company can borrow from the Nidhi Company.

Conclusion

The Nidhi Companies are regulated by Nidhi Scheme, 2014 and Section 20A of Companies Act, 1956. In India, where the habit of saving among the people is the primary concern of the Nidhi Companies has proved a great help in the society. The most prominent advantage that these companies have given is to revitalize the financial sectors of India which was lacked behind from so many years. The finance business in India is highly complicated and strict and so to ease down this sector, Nidhi Companies has been proved to be a better financial business in India.