Nidhi is a company formed to cultivate habit of saving and thrift and mutual benefit of members by lending and borrowing between members of the company. A Nidhi company is a non-banking financial company(NBFC) which is regulated by Reserve bank of India from time to time. However, RBI has excluded the Nidhi companies from the core provisions of RBI act.
Minimum number of members required to make a Nidhi company in India is three.”Nidhi Limited” words are mentioned in the name of the company. Management of a Nidhi company doesn’t have external involvement so it becomes easier to manage a Nidhi Company. Also, investments in a Nidhi Company are secure. They are also known as Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company. Reserve Bank of India is empowered to issue directions to Nidhi Companies in matters relating to their deposit acceptance activities. Nidhi Company registration is simple as compared to other types of finance companies like NBFC which require RBI license to start.