Nidhi company is a mutual welfare society incorporated chiefly with the object of promoting the habit of retrench and savings among its members. Nidhi Company’s core concept revolves around borrowing and lending money between its members themselves, i.e., it receives deposits from and lends to strictly its members, for their mutual benefit. A Nidhi Company goes by a handful of other names as well: Permanent Fund, Benefit Fund, Mutual Benefit Fund and Mutual Benefit Company to cite a few. The company advances loans to its members at rates that are comparatively reasonable. Nidhi gives easy source of loan to members against collateral. The loans are generally secured.  When compared to the organized banking sector, the deposits mobilized by Nidhi is not much. Secured means of investment due to rigid membership structure. Once you have started your Nidhi Company, you can be assured of a successful venture resulting in effective growth.

It is the Ministry of Corporate Affairs that regulates the functioning of Nidhi Companies.  In matters pertaining to directions on deposit acceptance, a Nidhi Company is expected to comply with RBI directives. It is mandatory for Nidhi Companies to have a minimum of three directors and seven members at the time of company formation. On or before completion of first year of incorporation, the minimum number of members is expected to reach 200. On or before completion of first year of incorporation minimum net owned fund required of a Nidhi Company is Rs.10,00,000/-. A person who wants to be a director of NIDHI company must hold Rs. 20,000 shares of the company.