Important Facts For Prelims
Nidhi Companies
- 13 Mar 2020
- 2 min read
Why in News
Recently, The Central Government has amended the provisions related to Nidhi companies under the Companies Act, 2013 and the Rules.
- The amendments have been made to make the regulatory regime for Nidhi Companies more effective.
- This will accomplish the objectives of transparency & investor friendliness in the corporate environment of the country.
Key Points
- Under Nidhi Rules, 2014, Nidhi is a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and saving amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.
- It is a company registered under the Companies Act, 2013.
- It works on the principle of mutual benefits that are regulated by the Ministry of Corporate Affairs.
- Nidhi Company is a class of Non-Banking Financial Company(NBFC) and Reserve Bank of India(RBI) has powers to issue directives for them related to their deposit acceptance activities.
- However, since these Nidhis deal with their shareholder-members only, RBI has exempted them from the core provisions of the RBI Act and other directions applicable to NBFCs.
