Nidhi Company means a company which has been incorporated with the object of developing the habit of thrift and reserve funds amongst its members and also receiving deposits and lending to its members only for their mutual benefit. All the Nidhi companies incorporated should have the last word as “Nidhi Limited” as part of its name. They are mutual benefit societies as their dealings are restricted to its members and the membership is limited. The source of funds for such a society is the contribution from its members.

Since Nidhi come under one class of NBFCs, the RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, since Nidhi deal with their shareholder-members only, RBI has exempted such notified firms from the core provisions of the RBI Act.