Type of Loans Can Be Provided After Nidhi Company Registration

Nidhi company registration is the best way to do lending business in India, Nidhi company registration is also known as Nidhi bank registration as this company work as a small bank. We can provide secured loans to any member of Nidhi.

Nidhi company registration is the best way to do lending business in India. For doing lending business every company needs to get permission from the Reserve bank of India. As per the RBI act, every company of the person who wants to starts any financial business needs to follow Section 45IA, 45IB, and 45IB of the RBI Act.

On the other hand, Nidhi bank are exempted from above three sections of RBI. This notification. In this notification, the Reserve bank of India provide permission of doing lending business by any company without even taken approval from the RBI. So, with the help of this notification Nidhi bank can do Non-banking financial company activity without any permission.

As per Nidhi rules 2014 prescribed under the companies act come in force as on 1st April 2014, in these rules there are 26 rules which every Nidhi company needs to follow while management and registration.

Type of loans under Nidhi company:

Nidhi company can provide three type of loans:

1. Gold Loan
2. Property Loan
3. FD Loan

Gold loan: Gold loan includes silvers and other precious metal and jewellery which may include diamonds and other precious stones. In the case of Gold loan, the Nidhi company can mortgage gold for the maximum duration of 1 year, after that the company need to renew or recover the amount within 3 months from the expiration of 1 year.

We should also understand that the mortgage value of the advance allow cannot be more the 80% of pure metal value. The purity of gold is depending on the valuation of registered valuer engaged in the Nidhi company.

In the case of non-recovery of gold loan from the member, the company can sold the gold and us the money for settlement of Nidhi advance and remaining amount to be returned to the member after all the genuine realization cost of the product.

Property loan: Property loan means the credit against the immovable property, in general, this loan known as Loan against property (LAP). LAP is a little different from the housing credit, as housing lending is provided for the purchase of house or construction of the house.

But in case of Loan against property credit is not for purchasing a house, this credit is for any other personal use of the borrower.

Before providing credit, nidhi organisation need to verify property documents and its better to hire some professional for proper legal and technical report of the property. The property cannot be mortgage for more than 7 years and for value more than 50% of the market value of the property.

FD loan: FD mortgage can be provided to any person who is member of Nidhi company, in this case the loan amount cannot be more than the maturity value of the FD. On the other hand, we have seen that some company provides loan on behalf of the LIC policy, there is not any restriction on any company to provide a credit on the insurance policy. But its better to give loan not more than the surrender value of the policy. However, some company provides loan according to the maturity value of the policy.

Some Restriction on Nidhi Company

No nidhi can provide any unsecured, personal or group loan. We cannot provide product loans or vehicle loans to our members.

I am Mohit Singh Director of one of the finest and professional legal firms with the name Ovakil.com, who are providing Online CA services in India from the last 4 years.