Nidhi Company is a type of Non Banking Financial Company, which operates, mainly in the unorganized money market. Money shall be borrowed and lend to its members only, for their mutual benefit .The main objective is to cultivate the habit of saving amongst its members.
This type of company is more popular in South India and is highly localized single office institutions. The principal source of funds are the contribution from the members .The members can avail to loans at relatively reasonable rates for purposes such as house construction or repairs and are generally secured .As Nidhi Company deals with only the shareholders members only, the RBI has exempted the notified companies from the core provisions of the RBI Act , and do not require to receive the license from Reserve Bank Of India ,and thereby easy to constitute .
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