Government cautions people of non-compliance by Nidhi companies
1 min read 24 Aug 2021, 05:48 PM ISTOnly entities incorporated as public limited companies are eligible for the tag of Nidhi companies, subject to riders. Their purpose is to cultivate the habit of thrift and savings among its members, receiving deposits from, and lending to, solely its members, for mutual benefit
PremiumNEW DELHI: The corporate affairs ministry on Tuesday cautioned people about non-compliance by Nidhi companies - entities in the non-banking finance sector, which are also called ‘mutual benefit societies.’
The ministry, in a statement, said entities have been applying to be declared as ‘Nidhi companies’ but a scrutiny up to 24 August showed that of the 348 forms examined, none satisfied the criteria for such a tag.
Also, a large number of entities operating as Nidhi companies or mutual benefit societies and engaging in financial transactions have not applied for recognition in this category, the statement said.
The ministry urged people to verify background of such entities before investing in them.
"Stakeholders are advised to verify the antecedents of the company functioning as a Nidhi company and ensure that the company has been declared as a Nidhi Company by the central government before becoming its member and depositing / investing their hard-earned money in such companies," the ministry said.
The law says that only entities incorporated as public limited companies are eligible for the tag of Nidhi companies, subject to riders. Their purpose is to cultivate the habit of thrift and savings among its members, receiving deposits from, and lending to, solely its members, for mutual benefit. These entities also should have ‘Nidhi Limited’ as the last words of their name.
