Background or history Nidhi Company

·         Long before the financial institutions were regulated and proper financial framework was established, idea of group lending and borrowing existed but not by the same name or in the same way as it exists today as Nidhi Company.


·         In Hindi, Nidhi refers to finance, treasure or fund. Nidhi’s used to grant secured loans against tangible assets for personal purposes like family functions, marriages, medical issues, education, property purchase, etc.


What is Nidhi Company?
·         A Nidhi Company or Mutual Benefit Society/Fund or any other name by which you may know it, is a company created for the mutual benefit of its members. This mutual benefit comes from group lending and borrowing.


·         Within these companies the members make deposits and these deposits are used to give secured loans to the members at a reasonable interest rate. The basic idea of a nidhi company is to save its members from the exploitation of money lenders who charge high interest rates.


·         By becoming members of Nidhi’s people develop habit of savings and self-reliance.

Nidhi Company Governing Law


Nidhi Company is governed by Nidhi Rules, 2014. Nidhi companies are incorporated in the nature of Limited company and hence,


They have to comply with two set of norms, one of Public limited company as per Companies Act, 2013 and another is for Nidhi Rules, 2014.


No RBI approval is necessary to register the Nidhi Company. RBI has specifically exempted this category of NBFC in India to comply with its core provisions such as registration with RBI etc.

What is Nidhi Company?


Nidhi companies are the limited companies registered under Companies Act, 2013. The main object of the company is to take deposit from shareholders and lend money to the members itself and no outside transaction takes place.


Nidhi Company is similar to NBFC. RBI has also exempted from the provisions which are applicable to other NBFC to Nidhi Company.


Nidhi companies are also known as Mutual Benefit funds as they have internal effect only, Mutual benefit company, Permanent Fund, Benefit fund, etc. Around 80% of the Nidhi companies are situated in Tamil Nadu.

Why People Register Nidhi Company?


Nidhi Company is one of the categories of NBFC or in other words, it is the cheapest and easiest form of NBFC as well. Also, it is very easy form to register and does not require much capital.


Anybody can register a Nidhi Company with only 5 lakh minimum capital and with minimum of seven members.



Through, there are various restrictions as well, but we look at its cost involved, we can say it is a small and legal ways to start the finance business in India.


When you business grew a lot in this, then you can anytime graduate to a full fledge Non Banking Financial Company.

Basics of Nidhi Company

Before we explain the process of registration, you must understand the basic of Nidhi Company:

1. Nidhi Company is also called a Mutual Benefit company. It promotes the art of saving and utilization of funds within its member community.

2. Nidhi Company cannot deal with anybody other than its members. You will have to understand the process of making a making in a Nidhi.

3. The minimum capital requirement for Nidhi Company is five lacs with at least seven members needed to incorporate a company.

4. Anybody can register a Nidhi Company; there is no background check, nor there did any prescribe qualification for its owners.