Nidhi Rules, 2014
20-Apr-2022: Central Government amends Nidhi Rules, 2014 to safeguard the interest of general public
Under the Companies Act, 1956, a Nidhi or Mutual Benefit Society meant a company which the Central Government declared as Nidhi or Mutual Benefit Society by notification in the official gazette. Under the Companies Act, 2013, initially there was no need for a company to get declaration from Central Government to function as a Nidhi Company. Such companies were required to only incorporate as a Nidhi and meet requirements under sub-rule (1) of rule 5 of Nidhi Rules viz., minimum membership of 200, Net Owned Fund (NoF) of Rs. 10 lakh, NOF to deposit ratio of 1:20 and keeping 10% unencumbered deposits in schedule commercial banks or post offices within one year of commencement of Nidhi Rules, 2014.
A committee was constituted in the Ministry to make recommendations on the issues arising from the implementation of the Companies Act, 2013 etc. and it was, inter-alia, felt that the earlier provisions under the Companies Act, 1956 requiring the approval of the Central Government for declaration as Nidhi were appropriate since they provided a centralized and more restrictive frame work for regulation of such entities and accordingly section 406 of the Companies Act, 2013 was amended with effect from 15.08.2019 to bring back the requirement of declaration as a Nidhi by the Central Government.
After the amendment in the Companies Act, 2013 w.e.f. 15.08.2019 and resultant amendments in Nidhi Rules, 2014 w.e.f. 15.08.2019, companies incorporated as Nidhis were required to apply to the Central Government in Form NDH-4 for declaration within 14 months of incorporation, if they were incorporated after the commencement of the Nidhi (Amendment) Rules w.e.f 15.08.2019 and within 09 months of commencement of the Nidhi (Amendment) Rules w.e.f 15.08.2019, if they were incorporated as Nidhis after 2014 but prior to 15.08.2019.
Under the Companies Act, 1956, about 390 companies were declared as Nidhi companies only. During 2014-2019, more than ten thousand companies get incorporated. However, only about 2,300 companies have applied in form NDH-4 for declaration. It has been noticed from examination of form NDH-4 that companies have not been complying with the applicable provisions of the Act and the Nidhi Rules, 2014 (as amended). To safeguard the interest of general public, it has become imperative that before becoming its member, one must ensure declaration of a company as a Nidhi by the Central Government and towards this, few necessary/important amendments in the Rules have been carried out which are applicable to the Companies to be incorporated after Nidhi (amendment) Rule, 2022, as under:-
- A Public Company incorporated as a Nidhi with a share capital of Rs. 10 lakhs; needs to first get itself declared as a Nidhi from the Central Government by applying in form NDH-4 with a minimum membership of 200 and NOF of Rs. 20 lac within 120 days of its incorporation.
- The Promoters and Directors of the company have to meet the criteria of fit and proper person as laid down in the rules.
- For timely disposal, it has also been provided in amended Rules that in case no decision is conveyed by the Central Government within 45 days of the receipt of applications filed by companies in form NDH-4, approval would be deemed as granted. This would apply for such companies which shall be incorporated after Nidhi (Amendment) Rules, 2022.
North Eastern Development Finance Corporation Ltd. (NEDFi)
14-Mar-2022: North Eastern Development Finance Corporation
North Eastern Development Finance Corporation Ltd. (NEDFi), has organized a Startup Investment Festival, 2022 from 15.02.2022 to 15.03.2022. This event will provide a platform to local entrepreneurs to showcase their business ideas and to pitch for investment through access to capital for scaling up their businesses. It will also help them avail other facilities like handholding support, advisor network, investor network, marketing support etc.
The reason for organizing this event is to reach out to start-ups and first generation entrepreneurs of North Eastern Region (NER) and boost the start-up ecosystem in the region.
North East Venture Fund (NEVF) is a dedicated venture fund for the NER promoted by NEDFi, Ministry of Development of North Eastern Region (MDoNER) and Small Industries Development Bank of India (SIDBI). It was launched in September, 2017 with a corpus of Rs. 100 crore, with contributions of Rs. 45 crore as interest free loan from MDoNER, Rs. 30 crore by NEDFi itself and Rs. 25 crore from SIDBI. It is registered with Securities Exchange Board of India (SEBI) under SEBI (AIF) Regulations, 2012, as a sector agnostic fund. Till date, a total of 36 proposals have been given in-principle commitment (sanction) of Rs. 74.77 crore under NEVF - in Healthcare, Edutech, Agri & Agri Allied, Tourism, Food Processing, IT&ITES etc. sectors.
The Government has taken various initiatives to organize special training for development of start-ups in the North-East region, inter alia, as follows:
- States’ Startup Ranking Framework (SRF) launched in February 2018 under which the following Workshops/Visits have been organized:
- Knowledge Exchange Workshops (SRF 2018)
- Knowledge Exchange Workshops (SRF 2019)
- International Exposure Visits (SRF 2019)
- Knowledge Exchange Week (SRF 2020)
- Startup India Yatra Initiative: The Department for Promotion of Industry and Internal Trade(DPIIT), launched Startup India Yatra in 2017 to promote entrepreneurship in rural and non-metro regions across States through grassroot startup aspirants by providing them incubation, mentorship, and funding support. As a part of this initiative, bootcamps were organized in Manipur, Assam, Tripura, Arunachal Pradesh, Meghalaya, Mizoram, and Nagaland from January 2019 to March 2019 reaching over 6600 individuals from 44 districts of these 7 States. In all, 179 incubation offers were extended along with a funding support of Rs. 20.1 lakhs as cash prize to 57 winners.
- As a part of DPIIT program named WING - capacity development programmes for existing and aspiring women entrepreneurs were conducted in Guwahati, Assam on 27-28 February 2020 with 45 attendees; and in Kohima, Nagaland on 22-23 January 2020 with 114 attendees. The participants were given mentoring sessions on themes like Venture Ideation and Business Model Validation, Governance, Legal/Compliance, Marketing/Branding, Creating differential, Finance & Financial Decisions and Mastering Customer Acquisition Strategy & Scaling-up.
- Startup Sensitization Training in Meghalaya & Assam: A physical training session was organized by DPIIT in Shillong on the 25th of September 2021 in which around 40 entrepreneurs of the state participated and shared their experiences and success stories. A Startup Bootcamp was held by DPIIT on 23rd September 2021, at Guwahati in which around 30 startups of Assam participated and were sensitized about the programmes under the Startup India initiative.
- Incubator Capacity Building Engagement (Mizoram):Startup India, along with Mizoram State Entrepreneurship Development Monitoring Committee organized a consultation session with incubators from Mizoram on 22ndOctober 2021 as a part of Capacity Building Program.
10-Dec-2021: NEDFI Announces New Scheme Atmanirbhar Hastshilpkar Scheme for the Artisans under Ministry of Doner
North Eastern Development Finance Corporation Ltd. (NEDFi), a premier financial institution in the North-Eastern Region with its head office at Dispur, Guwahati and branch offices all across North-Eastern Region has completed an eventful twenty-six years since its establishment in 1995. Over the years, the Corporation has provided loans to over 7500 projects and taken up several development initiatives through its CSR activities in the eight states of North-East India. Through its varied activities and active engagement with thousands of entrepreneurs in the region, NEDFi has become a household name in the region.
With the objective to develop the petty artisans of the North Eastern Region by providing financial assistance in the form of term loan for income generating activities for setting up / expansion / modernization / working capital requirement and other activities related to the sector NEDFi has introduced Atmanirbhar Hastshilpkar Scheme to the grass root Artisans of the region. The scheme was officially launched on 9/12/2021. During the launching ceremony, a total of 17 artisans have been provided with credit assistance of Rs.1 lakh per artisan. The credit facility is collateral free and carries a subsidized interest rate of 6% p.a., which is repayable in 24 months.
For regular repayment, an incentive of 1% on the interest rate is provided, which will be refunded to the artisans on successful repayment of loans.
The interested artisans can apply for the scheme at NEDFi registered office Guwahati and any of its branch offices (details in www.nedfi.com) with the following eligibility criteria:
- Registered/ unregistered artisan/ Individual
- Having valid qualification or practicing any art form
- No existing loan from any other bank/ financial institution
- Bank Account
- Aadhaar Card (optional)
Non-Performing Assets(NPA)
7-Feb-2022: Gross non-performing assets of scheduled commercial banks have declined
As per Reserve Bank of India (RBI) data on global operations, gross non-performing assets (GNPAs) of scheduled commercial banks (SCBs) have declined from Rs. 9,33,779 crore (GNPA ratio of 9.07%) as on 31.3.2019 to Rs. 8,00,463 crore (GNPA ratio of 6.93%) as on 30.9.2021.
Further, the Minister stated, GNPAs of Deposit Taking-NBFCs and Non-Deposit taking Systemically Important-NBFCs were Rs. 1,91,413 crore (GNPA ratio of 6.87%) as on 30.9.2021.
Giving more details, the Minister stated that as per RBI inputs, GNPAs of Public Sector Banks (PSBs) as a proportion to that of SCBs have decreased from 79.2% as on 31.3.2019 to 75.7% as on 31.3.2020 to 73.8% as on 31.3.2021 and further to 72.3% as on 30.9.2021, whereas GNPAs of Private Sector Banks (PVBs) as a proportion to that of SCBs have increased from 19.4% as on 31.3.2019 to 23.0% as on 31.3.2020 to 24.2% as on 31.3.2021 and further to 24.9% as on 30.9.2021.
On the question of various corrective measures taken by the Government and the RBI, the Minister stated that several initiatives have been taken to increase the credit penetration in the economy, which includes, inter alia, the following —
- 44.51 crore accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY), a scheme with a National Mission for Financial Inclusion to ensure access to financial services, namely, a basic savings and deposit accounts, remittance, credit, insurance, pension in an affordable manner;
- Overdraft facility of limit upto Rs. 10,000 extended to eligible PMJDY account holders;
- The PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme launched by the Government to help poor street vendors, impacted by COVID-19 pandemic, to resume their livelihood activities has enabled 32.69 lakh street vendors to access credit amounting to Rs. 3,364 crore till 31.1.2022;
- Operationalisation of enhanced access to credit under Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM) and Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM) schemes for self-employment programme, under which 78,66,199 and 16,63,704 beneficiaries, respectively have been provided credit facilities in the last three financial years;
- Bank credit to Non-Banking Financial Institutions (NBFCs) other than NBFCs-Micro Finance Institutions (MFIs) for on-lending to agriculture, micro and small enterprises, and housing has been made eligible for classification as priority sector;
- Digitalisation in lending to increase reach of institutional credit;
- Initiation of digital lending has been made contactless through PSBloansin59minutes.com, to provide online in principle approval of loans to Micro, Small and Medium Enterprises (MSMEs), Home Loans, Personal Loans and Auto Loans to individuals;
- Online bill discounting for MSMEs has been enabled on competitive basis through Public Sector Banks (PSBs) onboarding onto the Trade Receivables Discounting System (TReDS) platform;
- End-to-end automated digital lending has been introduced in larger PSBs for unsecured personal loans (in five PSBs), loans to micro-enterprises (“Shishu Mudra”, in five PSBs) and renewals of loans to MSMEs (in three PSBs);
- Customer-need-driven, analytics-base credit offers have been given an impetus, resulting in Rs. 49,777 crore of fresh retail loan disbursements by the seven larger PSBs in the financial year 2020-2021; and
- Setting up of Loan Management Systems and Centralised Processing Centres in Public Sector Banks (PSBs) for improving the turn-around-time (TAT).
- Specific target of 10% of Adjusted Net Bank Credit (ANBC) for small and marginal farmers has been fixed for all commercial banks, to be implemented in phased manner of a four-year period w.e.f. 2020-21 to facilitate the flow of credit of small and marginal farmers;
- Credit Outreach Programme launched by Government on 16.10.2021 to make loans available to eligible borrowers, through special camps across the country by banks under which an aggregate loan amount of Rs. 94,063 crore has been sanctioned up to 26.11.2021, as per inputs from banks; and
- To ensure availability of agriculture credit at a reasonable cost / reduced rate, an interest subvention scheme (2%) for short term crop loans upto Rs. 3 lakh is being implemented through Public Sector Banks and Private Sector Banks (reimbursement through RBI), Regional Rural Banks and Cooperative Banks (reimbursement through NABARD).
The Minister further stated that several measures have been taken to promote regular repayment and prevent those loan accounts turning into non-performing assets (NPAs), which includes, inter alia, the following —
- instituting use of third party data sources in PSBs for comprehensive due diligence across data sources at the sanction stage itself, to mitigate risk on account of misrepresentation and fraud;
- classification of accounts as special mentioned accounts (SMA) for early recognition of signs of incipient stress resulting in default in timely servicing of debt obligations, enabling banks to initiate timely remedial actions to prevent their potential slippages into NPAs;
- institution of comprehensive, automated Early Warning Systems (EWS) in banks, with ~80 EWS triggers, using third-party data and workflow for time-bound remedial actions, to proactively detect stress and reducing slippage into NPAs;
- incentivising regular repayment through linking of eligibility for the next cycle of working capital loan with an enhanced limit with on-time or early repayment of existing loan under PM SVANidhi scheme; and
- repayment behavior of borrowers in their loan accounts is reported to credit information companies (CICs), and banks include these information in the credit appraisal and decision making process for further sanctioning of loans to borrowers.
As per RBI inputs, the inspection reports of the banks are disclosed by RBI, under the Right to Information (RTI) Act, 2005, after the supervisory process regarding the inspection report of the specific year is completed, as per the procedures laid down under Section 11 and other relevant provisions of the RTI Act, 2005, the Minister stated.