A Nidhi Company is a form of financial service provider with the aim of inculcating the habit of saving and thrift in its members, receiving deposits from and lending to them only for their mutual benefit, and adhering to the rules set forth by the Central Government for the regulation of such companies.
Nidhi companies can only take deposits from their investors and can only lend to their members, so the funds contributed to a Nidhi company come from its members (shareholders) and are only used by the Nidhi company’s shareholders.
In matters relating to Nidhi Company’s deposit acceptance operations, the RBI has the authority to issue directions. The notified Nidhis, on the other hand, are excluded from the RBI Act’s core provisions as well as other NBFC-related directives. Nidhi Company is a great place to take a deposit and lend to a particular population.
Benefits of Nidhi Comany:
- No RBI ruling
- Easy lending and borrowing from its members
- Rate of Interest is low on borrowing, as compare to other financial institution
- Motivates members for saving
- Ownership gets transferred very easily
