an in in ndia 12.37
any mutual benefit society58 notified by the Central Nidhis are companies registered under the
/ Union Government as a Nidhi Company. Companies Act, 1956 and are regulated by the
They are created mainly for cultivating the habit Ministry of Corporate Affairs (MCA). Even
of thrift and savings amongst its members. The though Nidhis are regulated by the provisions
companies doing Nidhi business, viz., borrowing of the Companies Act, 1956, they are exempted
from certain provisions of the Act, as applicable to
from members and lending to members only,
other companies, due to limiting their operations
are known under different names such as Nidhi,
within members.
Permanent Fund, Benefit Funds, Mutual Benefit
Nidhis are also included in the definition of
Funds and Mutual Benefit Company.
NBFCs, which operate mainly in the unorganised
Nidhis are more popular in South India money market. However, since 1997, NBFCs have
and are highly localised single office institutions. been brought increasingly under the regulatory
They are mutual benefit societies, because their ambit of the RBI. Non-banking financial entities
dealings are restricted only to the members; partially or wholly regulated by the RBI include:
and membership is limited to individuals. The (i) NBFCs comprising equipment leasing
principal source of funds is the contribution from (EL), hire purchase finance (HP), loan
the members. The loans are given to the members (LC), investment (IC) [including primary
at relatively reasonable rates for purposes, such as dealers (PDs) and residuary non-banking
house construction or repairs and are generally companies (RNBCs);
secured. The deposits mobilised by Nidhis are not (ii) Mutual benefit financial company
much when compared to the organised banking (MBFC), i.e., nidhi company;
sector. (iii) Mutual benefit company (MBC), i.e.,
potential nidhi company; i.e., a company
58. Mutual Benefit Society (also known globally which is working on the lines of a
as ‘benefit society’ or ‘mutual aid society’) is an
Nidhi company, but has not yet been so
organisation, or voluntary association formed to provide
mutual aid, enefit, or insurance for relief from common declared by the Central Government;
difficulties. Such organisations may be formally has minimum net owned fund (NOF)
organised with charters and established customs, or of Rs.10 lakh, has applied to the RBI for
may arise ad hoc to meet unique needs of a particular
time and place. They may be organised around a shared certificate of registration and also to the
ethnic background, religion, occupation, geographical Department of Company Affairs (DCA)
region or other asis. enefits may include money or for being notified as a Nidhi company
assistance for sickness, retirement, education, birth of
a baby, funeral and medical expenses, unemployment. and has not contravened directions /
ften enefit societies provide a social or educational regulations of RBI/DCA.
framework for members and their families to support
each other and contribute to the wider community.
(iv) Miscellaneous non-banking company
A enefit society may have some common features (MNBC), i.e., chit fund company.
– members having equivalent opportunity in the Since Nidhis come under one class of NBFCs,
organisation mem ers having equivalent enefits aid
RBI is empowered to issue directions to them
goes to needy (stronger helping the weaker); payment
of enefits y collection of funds from the mem ers in matters relating to their deposit acceptance
educating others about a group’s interest; preserving activities. However, in recognition of the fact that
cultural traditions; and mutual defence. Examples of these Nidhis deal with their shareholder-members
enefit societies include trade unions, self help groups,
etc. It is believed that such societies predate human only, RBI has exempted the notified Nidhis from
culture are found around the world. the core provisions of the RBI Act and other