1. What is Nidhi Company?
A NIdhi Company is different from a regular finance investment company or a Non Banking Finance company (NBFC), as it deals only with its shareholders or members, for the main purpose of mutual benefits of its members. A Nidhi Company accept deposits only from its members, and lends funds only to them on demand . Again, a Nidhi Company is not entitled to carry out business/activities related with hire purchase financing, leasing finance, chit funds, acquisition of securities issued by any corporate body, etc. or issue any debt instruments (such as preference share, debentures, etc.) in any form.
2. How is Nidhi Company Governed In Inda?
The rules, provisions, and regulations given in the Section 406 of the Companies Act 2013, and in the companies (Nidhi Companies) Rule of 2014, govern and regulate all Nidhi Companies in entire INDIA. Again the activities of Nidhi Companies fall under the ambit of RBI Directives which govern activities of NBFCs and other institutions dealing with financing and investment. RBI offers certain exemptions to the Nidhi Companies based on the fact that these Nidhi Companies deal only with its members, and with no outside people or investors.
3. Who Can Invest?
Only shareholders/Members of the Nidhi Company who has a membership ID, can invest in the scheme.
4. Where the Nidhi company Can Invest ?
A Nidhi company can only invest in the Fixed deposits of banks and only lends to its members.