what is Nidhi Company?

what is Nidhi Company?

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A Nidhi Company or Mutual Benefit Society/Fund or any other name by which you may know it,is a company created for the mutual benefit of its members.This mutual benefit comes from group lending and borrowing.

Within these companies the members make deposits and these deposits are used to give secured loans to the members at a reasonable interest rate.The basic idea of a nidhi company is to save its members from the exploitation of money lenders who charge high interest rates.

By becoming members of Nidhi's people develop habit of savings and self-reliance .

Background or history

Long before the financial institutions were regulated and proper financial framework was established ,idea of group lending and borrowing existed but not by the same name or in the same way as it exist today as Nidhi Company.

In Hindi, Nidhi refers to finance, treasure or fund. Nidhi's used to grant secured loans against tangible assets for personal purposes like family functions, marriages, medical issues, education, property purchase, etc.

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