What is a Nidhi Company?
A Nidhi company belongs to the category of non-banking finance firms (NBFC). It is recognized under Section 406 of the Companies Act, 2013 and is governed by the central government. The basic business of such a company is to facilitate lending money between the core members of the company. Examples of a Nidhi Company are permanent funds, mutual benefit funds, a mutual benefit company and benefit funds. The core idea behind creating a Nidhi Company is to receive funds (deposits) from members or lend to them, for the mutual benefit of both parties. All lending and borrowing must comply with rules laid down in Chapter XXIV of Company Rules, 2014.