Context:
Ministry of Corporate Affairs (MCA) and Registrars of Companies (RoCs) significantly intensified action against Nidhi companies and firms defaulting on beneficial ownership disclosures.
NIDHI Companies:
- Recognized under Section 406 of the Companies Act 2013.
- Operates in the Non-Banking Financing Sector of India.
- Formed to borrow and lend money to its members, promoting savings and mutual benefit.
- Not required to obtain a license from the Reserve Bank of India (RBI), as they are registered under the Companies Act.
- Members – Minimum of 7 members required to start a NIDHI Company.
- At least 3 members must be directors.
- Nidhi Companies should
- Registered as public limited companies and include “Nidhi Limited” in their name.
- Must maintain a minimum of 200 members within a year and Rs 20 lakh in net owned funds
- Prohibited Activities –
- Cannot engage in chit funds, hire-purchase finance, leasing finance, insurance, or securities business.
- Prohibited from accepting deposits from or lending funds to non-members.
- Cannot issue preference shares, debentures, or any other debt instruments.
- Not allowed to open current accounts with their members.
Source: Mint
Previous Year Question
With reference to ‘Urban Cooperative Banks’ in India, consider the following statements:
1. They are supervised and regulated by local boards set up by the State Governments.
2. They can issue equity shares and preference shares.
3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2021 Prelims]
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (b)