Section 406 of the Companies Act of 2013 and the Companies (Nidhi Companies) Rules of 2014 is comprising of all the provisions which are in relation to the “incorporation and governance of the Nidhi Companies in India”.
The guidelines and directives for the Nidhi Companies are also issued by the RBI. These are mainly related to financial activities and investments by companies including the NBFCs.
Because of “Nidhi Companies” being engaged in the business of deposits and loans by it’s members only, certain exemptions have been provided to these companies, by the RBI.
The interest charged on the loans under a Nidhi Company is quite reasonable. The purposes these are sought for, includes, manufacturing/renovation of houses or child’s education, etc. The loans are provided against security only.
The deposits under Nidhis do not earn much interest as compared to deposits in the organized banking sector.
All lending and borrowing of the Nidhi Companies is done by it’s members, exclusively. Hence, such companies are also referred to as Mutual Benefit Societies. Because they work for the mutual benefit and welfare of all members.
If you are looking to start a business in financing or loans in India, then Nidhi Company is the best option for it.