The basic concept of nidhi is
"Principle of Mutuality" ("Paraspara Sahayata"). Thus
they function for the common benefit advantage of all their members/shareholders.
Nidhi Company also known as Permanent Fund, Benefit Funds, Mutual
Benefit Funds and Mutual Benefit Company is 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.
Nidhi Companies are regulated by
Ministry of Corporate Affairs. Reserve Bank of India is empowered to issue
directions to them in matters relating to their deposit acceptance activities.
However, in recognition of the fact that these companies deal with their shareholder-members
only.