What is Nidhi Company?

Q.  What is Nidhi Company?
- Published on 21 Dec 16

a. Companies lending and borrowing only to small and medium businesses
b. Investment companies investing only in rural areas
c. NBFCs borrowing and lending money only between their members
d. Rural NBFCs borrowing and lending money to people

ANSWER: NBFCs borrowing and lending money only between their members
 
A Nidhi Company, is one that belongs to the non-banking Indian Finance sector (NBFC) and is recognized under section 620A 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.

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