A Nidhi Company is a type of Non-Banking Financial Company (NBFC). It is primarily formed to cultivate the habit of savings and thrift among its members. Unlike other NBFCs, a Nidhi Company does not require RBI approval and is governed by the Ministry of Corporate Affairs (MCA). It is an excellent option for small businesses and communities that aim to provide affordable financial services exclusively to their members.

The primary purpose of a Nidhi Company is to accept deposits from and lend to its members, thereby promoting a culture of mutual financial support. It operates on the principle of mutual benefit, making it a secure and profitable business model for individuals looking to enter the financial sector. The structure is best suited for small financial businesses, local credit societies, and community-based financial institutions.

The registration process for a Nidhi Company involves incorporating a public limited company with at least seven members and three directors. The company must have a minimum paid-up equity share capital of ₹10 lakhs and include “Nidhi Limited” in its name. Within one year of incorporation, it must have at least 200 members and maintain a net-owned fund (NOF) of ₹10 lakhs or more.

A Nidhi Company enjoys several benefits, such as simple formation, low compliance requirements, exemption from RBI regulations, and limited capital investment. However, it has some restrictions, including limiting its operations to members only and being prohibited from engaging in speculative investments or external financial activities.

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