By imjpmaurya 
Nidhi Company isn’t permitted to do the Micro Finance business in India. Micro Finance credit is a kind of business that has been specially assigned to Non-Banking Financial Companies (NBFCs) with the status of MFI with a minimum net owned fund of Rs.5 crore. In this article, we will discuss Micro Finance Business or Gold Loan by Nidhi Company.
What all are allowed?
Nidhi Companies isn’t allowed to do any kind of microfinance business or in other words, it is said Nidhi Company isn’t allowed to afford unsecured loans to their members. Nidhi Company can only lend a secured loan that too only to its members. Further, Nidhi companies are allowed to advance loan only to the following securities:
Gold Loan by Nidhi Company:
It is one of the main streams of business for Nidhi Companies. Gold loan by Nidhi Companies are so famous and are subject to certain rules and regulation according to the Nidhi Rules, 2014.
- Here are the conditions inter alia:
- 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 a gold loan.
- A Nidhi Company is allowed to advance the maximum loan of Rs.200,000 if the deposits don’t exceed the limit of Rs.2 Crore.
Loan against Property:
This type of loan is not very famous for Nidhi Company. However, it is an option through which Nidhi Company can pay loans to that person or individual who doesn’t have gold with them. This loan is also subject to certain conditions:
- The maximum loan can be rs.200,000 if deposits do 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.
- Loan against FD/RD and Deposits.
This type of loan is also advanced by Nidhi Companies. Nidhi can advance loans against FD/RD 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 Companies.
- Loan Against NSC/Government Bonds
- This type of loan is very rare but Nidhi company can advance loan against these securities as well.