13 Cos given Nidhi status; 150 applications in queue

New Delhi, July 30 (UNI) Notwithstanding the sordid history of private finance companies, the saga of Nidhi companies has assumed new buoyancy with 13 such companies having been given this status by the Government in 2005-06 and as many as 150 applications pending before the Department of Company Affairs (DCA).

The Government has been granting Nidhi status to certain types of non-banking financial companies (NBFCs) under Section 620 A of the Companies Act, 1956.

As on date, 257 companies have been granted 'Nidhi' status. The story of chit fund companies and 'vanishing' companies leaves much to be desired, some of whom left investors in the lurch depriving them of their hard-earned money.

But once again there is a resurgence of interest to get registered as 'Nidhi' companies which are community micro-savings and loan outfits, department sources said.

A key factor is the desire of small investors to diversify their portfolio. Another perhaps is that such companies are nearer home and more in tune with local culture. Rather than deal with large formal faceless organisations, it is more convenient to do business with those who can speak your language and are more in tune/acquainted with your behaviour.

The criteria for declaring NBFCs as Nidhi companies states that: the net owned fund should not be less than Rs 10 lakh; the companies should have earned reasonable profit after wiping off all preliminary expenses and brought forward losses and the number of members should not be less than 500.

Also, borrowing and lending is restricted to the members only.

Companies can accept deposits up to twenty times of their respective net owned funds and can grant property loans up to 50 per cent of the total loans granted and 50 per cent of the value of the immovable property offered as security. According to the criteria laid down, companies should have invested 10 per cent of its deposits in fixed deposit with a scheduled bank.

Other requirements are that the NBFC has to be regular in filing returns and have no complaints pending against the company and its directors.

During 2005-06, the companies declared as Nidhis were: M/s Kasi Viswanathar (Chennai) Benefit Fund Ltd, Chennai; M/s Raj Benefit Fund Ltd, Tamil Nadu; M/s Trisea Benefit Fund Ltd, Tamil Nadu; M/s Vilavancode Selfreliance Credit Services Ltd, Tamil Nadu; M/s Muthoot M George Permanent Fund Ltd, Kerala; M/s North West Madras Benefit Society Ltd, Chennai; M/s Purasai Benefit Fund Ltd, Chennai; M/s Dhana Chakra Permanent Fund (India) Ltd, Andhra Pradesh; M/s Vijaya Krishna Permanent Fund Ltd, Andhra Pradesh; M/s Rani Mangammal Benefit Fund Ltd, Tamil Nadu; M/s Sree Varadaraja Benefit Fund Ltd, Chennai; M/s Sri Kaalihambal Benefit Fund Ltd, Chennai; M/s Coastal Permanent Fund Ltd, Andhra Pradesh.

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