A Nidhi Company is a type of Non-Banking Financial Corporation (NBFC) which is regulated and governed by the provisions of the Companies Act, 2013. Significant difference of this business model from other companies is that it deals only with deposits from and loans to its members (shareholders). The deposits by the members are used to provide loans or advances to the members themselves, and to acquire government-issued stocks/bonds/debentures/securities. Hence this company is based on the principle of Mutual Benefits.
Further, it is to be noted that though the company is regulated by the Ministry of Corporate Affairs this business structure do fall under the ambit of Reserve Bank of India(RBI), as it is similar to that of an NBFC. However, there are no separate registrations to be done under RBI for a Nidhi company and RBI has excused this Company from the core provisions of the RBI Act, 1934 and other regulations prevalent on an NBFC, as these Companies deals only with the money of its shareholders or members.
