Nidhi companies in India provide simple and convenient solutions for investment and savings for lower and middle class individuals. They were created to encourage small savings among these groups. Nidhi companies invest funds collected from members and reallocate them among members, providing returns at fixed intervals. The RBI requires that any company operating as a Nidhi must include the word "Nidhi" in its registered name to distinguish it from regular finance funds. Nidhi companies can only engage in internal circulation of loan and investment schemes among members.