Nidhi Company Can Give Loans

Nidhi Company has been taken from the Hindi word Nidhi means treasure. Nidhi company follow Companies Act, 2013.These companies are mainly formed for savings. Nidhi companies are also called the mutual benefit society.

Nidhi Company creates the habit of thrift and savings amongst its members. Members can receive deposits and they can lend as well for their mutual benefit.These companies are considered as the secured means of investment. In Nidhi company loans can be can be approved and deposits can be accepted between its members.

Provisions of Loan in Nidhi Company

• There are provisions for loans in the Ordinary Course of Business but the amount of interest on such loan shall be at least the rate of interest prescribed by RBI.
• In some cases, the guarantee is given by company against the loan taken by its Subsidiary Company from the bank or financial institutions.
• Approval of certain ministry should be taken Ministry or department of Central Government and/or State Government prior to giving of any loan or guarantee or security.

Loans can be provided to its members

There are certain limits on which can be provided

• Two lakh rupees, where the total amount of deposits of such Nidhi from its members is less than Two Crore rupees.
• Loans can be provided to its members on the basis of some security.
• Gold, silver and other types of jewellery. There should be the repayment period of one year which should not exceed one year.
• The Total loan against the immovable property shall not exceed fifty per on the overall date of approval by the board. The repayment period should not exceed 7 years.
• Receipt of Fixed deposits, National Savings Certificates, other Government Securities and insurance policies.
• The maturity date of such securities shall not fall beyond the loan period or one year.

• In the point of provisions of loan in Nidhi Company you use the definition of loan to directors which is not right.

Sometimes loan against fixed deposits, the period of loan shall not exceed the unexpired period of the fixed deposits.

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Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.