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When you became a member of GREEN PARIVAR NIDHI Ltd., you are allotted one share under Nidhi notification norms is ₨ 10 only. But this gives you a right to participate in the management process of the organization through the MCA (Ministry of Corporate Affairs).

Regulatory framework

Nidhis are companies registered® under section 620A of the Companies Act, 1956 (Section 406 of the new Companies Bill 2012, as passed by Lok Sabha) and is regulated by Ministry of Corporate Affairs (MCA).Even though Nidhis are regulated by the provisions of the Companies Act, 1956, they are exempted from certain provisions of the Act, as applicable to other companies, due to limiting their operations within members.

Nidhis are also included in the definition of Non- Banking Financial companies or (NBFCs) which operate mainly in the unorganized money market. However, since 1997, NBFCs have been brought increasingly under the regulatory ambit of the Indian Central Bank, RBI. Non-banking financial entities partially or wholly regulated by the RBI include:

Mutual benefit financial company (MBFC), i.e. Nidhi Company;

mutual benefit company (MBC), i.e. potential Nidhi company; i.e., A company which is working on the lines of a Nidhi company but has not yet been so declared by the Central Government; has minimum net owned fund (NOF) of Rs.10 lakh, has applied to the RBI for certificate of registration and also to Department of Company Affairs (DCA) for being notified as Nidhi company and has not contravened directions/ regulations of RBI/DCA.

The Central Government vide Notification No.5/7/2000-CL.V dated 23rd March 2000 constituted a Committee to examine the various aspects of the functioning of Nidhi Companies. There was no Government Notification defining the word ‘Nidhi’. Taking into consideration the manner of functioning of Nidhis and the recommendations of the Shri P. Sabanayagam Committee in its report and also to prevent unscrupulous persons using the word ‘Nidhi’ in their name without being incorporated by Department of Company Affairs (DCA) and yet doing Nidhi business, the Committee suggested the following definition for Nidhis:

A written “By – laws” is of paramount importance because:

  • Without the written understanding, people may become confused and things may not get done.
  • It will act as a point of reference and help resolve any problem or controversy that may arise.
  • It reassures the public and funding bodies that the society is properly run and that money is effectively managed.
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