It is a company classified as an NBFC (a Non-banking financing company) and registered under Section 406 of the Companies Act, 2013. The leading company of such a company is to facilitate lending money between the core members of the association. This way members (or shareholders) are encouraged to save money and invest them within the company. These deposits are then used by the company for its members (or shareholders), to provide loans or advances, and to acquire government-issued stocks/bonds/debentures/securities. It is controlled by the Ministry of Corporate Affairs, while the RBI monitors all its economic dealings.
1.Inculcates the habit of savings: The sole objective of Nidhi company is to promote the culture of savings among its members.
2.Few RBI guidelines: Nidhi company falls under the NBFC category, but it does not require approval from the Reserve Bank of India.
3.Separate Legal Entity: Nidhi Company is a separate legal entity which means it can acquire assets and incur debts under its name.
4.Easy Formation: The process of Nidhi company formation is very simple and easy. There are very few requirements compared to other NBFCs.
5.Ease of Management: Even though Nidhi Company is an NBFC, it is very easy to manage and make changes in the organization