A Nidhi Company is a type of financial service provider, which has the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with such rules as are prescribed by the Central Government for the regulation of such class of companies is called as Nidhi Company
Nidhi companies are allowed to take a deposit from its members only and can lend to its members only, so the funds contributed for a Nidhi company are only from its members (shareholders) and used only among the shareholders of Nidhi company.
RBI is empowered to issue directions on Nidhi Company in matters relating to their deposits acceptance activities. However, RBI has exempted the notified Nidhis from the core provisions of the RBI Act and other directions applicable to NBFCs. Nidhi Company is an ideal entity to take a deposit from and lend to a specific group of people.
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