Nidhi Company

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Nidhi Company is a kind of NBFC; Non-Banking Financing Company which is registered under Section 406 of Companies Act 2013. The foremost business of a Nidhi Company is to lend and borrow money in between its core members. The member of the shareholders of the Nidhi Company is encouraged to save money and invest them within the company. The members can use these deposits to provide loans, to buy government-issued stocks/ bonds/ debentures/ securities. They work on the concept of mutual benefits. They are not directly regulated by the RBI, but RBI has powers to issue instructions for them related to their deposit acceptance activities.
Section 8 Company, Private Limited Company, Company Compliances,
Note: –
** Director: – Section 2 (34) of the Act prescribed that “director” means a director appointed to the Board of a company. A director is a person appointed to perform the duties and functions of director of a company under the provisions of the Companies Act, 2013
** Member: – Section 41 of the Act Defines that ” member” the subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration, shall be entered as members in its register of members.
The registration process requires less documentation and paperwork than an NBFC. Therefore t is easier to register and operate.
It has a separate legal existence than that of its shareholders and is liable to the extent of its assets.
RBI regulations are limited. It follows Nidhi Rules, 2014 for its business activity.
It promotes the habit of saving and thrifts among the lower and middle sections of the society. People contribute to the funds and avail credit in need at a lower Interest rate.
The overall operations are concerned with and to their members only. No external party can deposit money or intervene in management-related decisions.
It is continuous even death or departure of an owner or director cannot affect the existence of the company.