A Nidhi company is a type of non-banking financial company (NBFC) formed to promote the habit of thrift and savings among its members. It is governed under the Companies Act.

These companies operate by encouraging their members to deposit and borrow funds within the group, providing low-interest loans for various needs. They focus on mutual benefit and cooperative values.

Nidhi companies can only operate with their members and are strictly limited to conducting the activities for which they were formed. They cannot engage in external borrowing or non-member transactions.