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This article explains what business a Nidhi company can do or cannot do. Loan? Insurance? Fixed Deposit? Taking Deposits?

1. Can Nidhi Company do Microfinance business?

Answer – Nidhi Companies are not permitted to do microfinance business in India. Only RBI registered NBFC-MFI with net worth of INR 5 crores can do microfinance business in India.

2. Can Nidhi Company do vehicle finance business?

Answer – Nidhi Companies are not permitted to do vehicle finance business in India. Only RBI registered NBFCs with net worth of INR 2 crores can do vehicle finance business in India.

3. Can Nidhi Company provide unsecured loan without collateral?

Answer – Nidhi Companies are not allowed to do unsecured loan business in India. Only RBI registered NBFCs with net worth of INR 2 crores can provide unsecured loan in India.

4. What finance business Nidhi company is allowed to do in India?

1. Gold Loan – Nidhi companies can give loan against gold, also called “Gold Loan”. This is one of the main nidhi company business allowed. Gold loans by Nidhi Companies are very popular and common practice. Gold Loans are subject to certain rules and regulation as per Nidhi Rules, 2014. Here are the following conditions:

  • The maximum finance against the gold shall be up to 80%.
  • The maximum repayment period shall be 12 months.
  • The rate of interest shall not exceed 7.5% plus the maximum rate of interest on gold loan.
  • A Nidhi Company can advance maximum loan of 200,000 if deposits does not exceed Rs.2 Crore.

2. Loan against fixed / immovable Property: Generally Nidhi company business allowed to give secured loan against property.  This type of loan is also subject to certain conditions:

  • The maximum loan amount can be Rs.200,000 if deposits does not exceed Rs.2 Crore.
  • The repayment period of loan shall not exceed 60 months.
  • The maximum finance can be up to 50%.
  • Further, this type of loan cannot exceed 50% of the total loan amount.

3. Loan against Fixed Deposit and Other Cash Deposits: This type of loan is also advanced by Nidhi Company in Indai. A Nidhi company can advance loan against FD and also even against the deposits kept by it. Further, this type of loan is also subject to certain restrictions:

  • The repayment period under this loan shall not exceed the period of Fixed Deposit.
  • The maximum finance under this case shall be up to the value of Fixed Deposit under Nidhi Company.

4. Loan Against National Savings Certificates (NSC) or Government Bonds: This type of loans are very rare but Nidhi company can advance loan against these securities as well.

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