A Nidhi company is a type of non-banking finance company (NBFC) that operates on a mutual benefit basis. The primary business of Nidhi companies is to lend and borrow money among its members, who are also the shareholders of the company.

Nidhi companies are set up to encourage savings and mutual help among its members. They provide an opportunity for members to save and earn interest on their savings, and also borrow money at reasonable rates of interest. These companies are also known as Permanent Fund, Benefit Funds, and Mutual Benefit Funds.

Nidhi companies are regulated by the Ministry of Corporate Affairs (MCA) and are required to comply with various laws and regulations, including the Companies Act and the Reserve Bank of India (RBI) guidelines. These companies are also required to maintain a minimum net owned fund of Rs. 5 Lakhs.

Objective of Nidhi Company

The main objective of Nidhi companies is to encourage savings among its members, and to provide loans to its members at reasonable rates of interest. Members can deposit their savings with the company, and in turn, borrow money from the company for various purposes such as personal and business needs.

Summary

Nidhi companies are a type of NBFC that operate on a mutual benefit basis. They are set up to encourage savings and mutual help among its members, by providing an opportunity for them to save and earn interest on their savings, and also borrow money at reasonable rates of interest. These companies are regulated by MCA and RBI.