The Reserve Bank of India (RBI) has imposed clear restrictions preventing registered Nidhi companies from operating as peer-to-peer (P2P) lending platforms. This regulatory stance stems from the fundamental difference between Nidhi companies’ member-only thrift model and P2P lending’s open-market nature. While Nidhi firms are permitted to facilitate financial transactions exclusively among their members, P2P platforms operate as broader market intermediaries connecting unrelated borrowers and lenders, requiring distinct regulatory oversight under the RBI’s NBFC-P2P framework.  

The prohibition maintains the traditional scope of Nidhi companies as community-based savings institutions while addressing potential systemic risks. Nidhi firms lack the necessary infrastructure and regulatory approvals to manage the credit assessment, risk diversification, and investor protection mechanisms mandated for P2P lending platforms. This separation ensures that Nidhi companies continue serving their original purpose of promoting financial inclusion among members without exposing them to the higher risks associated with open-market digital lending operations.  

For Nidhi companies seeking to expand into digital lending, the only compliant pathway involves obtaining a separate NBFC-P2P license from the RBI. The current regulations thus create a clear demarcation between traditional member-based thrift societies and modern fintech lending platforms, requiring Nidhi firms to either maintain their conventional operations or undergo complete regulatory transformation to enter the P2P lending space. This framework protects both the integrity of the Nidhi sector and the stability of India’s broader digital lending ecosystem.