Nidhi Company and mutual fund are two distinct form of business as they differ in terms of their objectives, and the nature of the business.
Very often people make a mistake of considering Nidhi Company and the mutual fund's company as one and the same form of companies. However, there is a very significant difference between the Mutual Funds and Nidhi Company. These two companies differ in the term of their objectives, nature of business, dealings etc.
Nidhi Companies are recognized under section 406 of the Companies act 2013 as the company belonging to the non- banking Indian Finance sector. The main objective of the Nidhi Company includes inculcating the habit of thrift and saving among its members only. The core business activity of this form of the company includes lending and borrowing among its members only. The basic principle of Nidhi Company is the principle of mutuality. Nidhi Company is also known as the permanent fund, Benefit Fund, Mutual Benefit Fund or mutual benefit company. Further, the Nidhi Companies are regulated by the ministry for corporate affairs.
Mutual funds are the kind of an investment vehicle that is created by the pool of money collected from many investors for investing in multiple securities. Mutual Funds are managed and operated by the professional money managers who allocate into the securities and try to make capital gains and incomes out of it. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. The mutual fund attempts to provide small or individual investors access to the professionally managed portfolios of equities, bonds and other securities. Through the mutual fund, money is invested in hundreds of securities thus the investor is able to attain diversification at very low prices.
Difference between Mutual Funds and Nidhi Company
Get complete information on Nidhi Company Registration Documents, Procedure and Requirements.