A Nidhi company, is one that belongs to the non-banking Indian Finance sector and is recognized under section 406 of the Companies Act, 2013. Their core business is borrowing and lending money only between their members. They are also known as Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company. It is regulated by Ministry of Corporate Affairs. Reserve Bank of India is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, in recognition of the fact that these Nidhis deal with their shareholder-members only.
Membership in a Nidhi:
1. A Nidhi shall not admit a body corporate as a member.
2. A minor shall not be admitted as a member in a Nidhi company.
3. But deposits may be accepted in the name of minor , if they are made by natural or legal guardian who is a member of the respective Nidhi.