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Question

Refer to the following information to answer the next 4 questions (Q9 to Q12) Nidhi Company is an NBFC (Non-Banking Financial Company). Nidhi in simple terms means a company which is formed with the object of cultivating the habit of thrift and savings. These are regulated entities and the rules and directions governing Nidhi Companies are issued from time to time. The formation of the Nidhi Company is very easy process. It requires only ____ members out of which 3 members would be the directors. The Nidhi company takes hardly 10-5 days to get registered. Also no. of the documents required for the registration are very less.

Consider the following statements and state which among the following are the correct statements for Nidhi companies?

A. Nidhi companies can borrow from and lend to, its members only

B. Nidhi companies follow the Nidhi Rules 2014 issued by the RBI

C. Nidhi companies are registered with RBI as NBFCs

A Only A Correct Answer Incorrect Answer
B Only A and B Correct Answer Incorrect Answer
C Only B and C Correct Answer Incorrect Answer
D Only A and C Correct Answer Incorrect Answer
E All of the above Correct Answer Incorrect Answer

Solution

Nidhi Company is an NBFC (Non-Banking Financial Company). Nidhi in simple terms means a company which is formed with the object of cultivating the habit of thrift and savings amongst the members and receiving deposits from and lending to the members for their mutual benefits. Only individual members are allowed in Nidhi companies and it cannot give loans to companies. These are governed by the Nidhi Rules 2014 issued by the Ministry of Corporate Affairs . Nidhi Company though it is a finance company and falls under the category of NBFC, does not require approval of RBI . Nidhi Company does not require to obtain a licence from RBI. Though the Nidhi Companies are free from the strict compliance of the RBI regulations, their deposit acceptance operations are governed by the RBI

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