Micro Finance Company Registration
With Firm Registration
- Ideal for loans
- For doing finance business
- Simple & Secure Online Process
- Dedicated Professional
- Get Registration in 10-15 Days
- Get Post Incorporation Assistance
Get Quote Instantly in a Minute
Introduction of Micro-Finance Company
Advantages of Micro Finance Company
Types of Micro-Finance Company
NBFC-MFI
Non-Banking Financial Company – Micro Finance Institution (NBFC-MFI) NBFC-MFI is a non-deposit taking NBFC which can be setup with minimum net owned funds of Rs. 5 crore and having not less than 85% of its assets in the nature of qualifying assets. The conditions and limitations of the loans are as follows:
- Loan disbursed by an NBFC-MFI to a borrower with a rural household annual income not exceeding ₹ 1,25,000 or urban and semi-urban household income not exceeding ₹ 2,00,000;
- Loan amount should not exceed ₹ 75,000 in the first cycle and ₹ 1,25,000 in subsequent cycles;
- Total indebtedness of the borrower should not exceed ₹ 1,25,000;
- Tenure of the loan should not be less than 24 months for loan amount in excess of ₹ 15,000 with prepayment without penalty;
- Loan can be extended without collateral;
- Aggregate amount of loans, given for income generation, should not be less than 50 per cent of the total loans given by the MFIs;
- Loan can be repaid on weekly, fortnightly or monthly installments at the choice of the borrower
Section-8 Company
Section 8 Company is incorporated with an object to promote commerce, art, science, sports, research, education, religion, protection of environment, charity or any other object, who intends to apply their income and profits in promoting their objects and prohibits the payment of dividend to its members. Section-8 Company can be incorporated as a Private or Public Company.
- Approval of RBI is not required.
- There is no requirement of minimum capital of Rs. 5 Crores.
- Minimum Compliances as compared to NBFCs.
- Such companies can give unsecured loans to small businesses of Rs.50,000.
- Such companies can give loans for dwelling residence up to Rs.1.25 lakh.
- Section-8 companies are required to follow the RBI guidelines on interest rate and processing charges.
- It is a legal finance business as laid in the master circular of RBI and you can sue the defaulter in case of non-payment of loan amount.
Documents Required for Incorporation
PAN Card
of the Member and Directors of the proposed Company; Passport in case of Foreign Nationals
Identity Proof
of the Member and Directors of the proposed Company (Aadhar / Voter ID / Driving License / Passport)
Address Proof
the Member and Directors (Utility Bill / Telephone Bill / Mobile Bill / Bank Statement not older than two months)
Latest
passport size photograph of Member and Directors
Business Address Proof Owned Property
(Copy of Registry and Latest Govt. Electricity Bill or Water Bill)
Business Address Proof Rented/leased
(Rent Agreement, NOC from the Owner, Latest Govt. Electricity Bill or Water Bill)
Minimum Requirements
- Minimum two Directors and maximum fifteen
- Minimum two Members
- Digital Signatures of Subscriber and Directors
- No Minimum Capital requirement
- Director Identification Number if available
- Non-profit objective i.e. charitable object
Process of Incorporation of Micro-Finance Company
1. Complete the Application Form
2. Document Processing
3. Application for DSC
4. Name Availability
5. E-filing for incorporation of a Company
6. Get Certificate of Incorporation
More Insights on Registration of Micro Finance Company
How to Select the Name of Company
- You can check Company name availability thereby logging into MCA where you need to keep in mind two or three available options along with the activity type. The name of Section-8 Company should have words like Association, Society, Council, Club, Charities, Foundation, Academy, Institute, Organization, and Federation. Our team will assist you in the selection of name of company.
- Also, along with checking the name availability we also need to check the trademark if already registered under the proposed name which makes the online application for registration more powerful. If you want to have a trademark of your word or logo you can get the same through Legal Window by clicking on the below mentioned link Trademark Registration
Other Key Points
- If the proposed Director is already having the DIN then you can also check whether DIR-3 KYC is completed. You can verify the same with the help of our experts. If the same is not done yet it can be done with help of Legal Window.
- The microfinance company is required to manage all the compliances after incorporation of the company like appointment of statutory auditor, filing commencement of business, Income Tax Filing, Annual Returns with ROC and other compliances as required by the law. Legal Window has a team of experts who keeps an eye on the due dates of your compliances and reminds you through mails.
- Acceptance of Deposits by Micro Finance Company: Companies Act, 2013 does not permit the section 8 companies to accept deposits. The company can invest its funds or raise capital or through donation start Microfinance Company. The company cannot take deposits from the market in order to lend the same in the market. It has to use its own funds.
FAQs on Micro-Finance Company
Micro finance Company refers to an array of financial services to low income group by providing loans, savings and insurance.
The advantages of incorporating a Microfinance Company are as follows:
- Generation of Employment
- Collateral free Borrowings
- Strengthening of Financial Condition
- Encourages entrepreneurship
The amortization of the processing fees is not permitted; it should be booked in the accounting period in which these are paid/ received.
The time duration depends upon the type of microfinance chosen by you. In case of Section-8 company, it generally takes 10-15 days and in case of NBFC-MFI it may take time of around 2-3 months for getting the approval from RBI.
The people in rural areas need credit which is cheap and does not increase the burden in their input cost which is important so that these sectors grow and develop and raise the Indian economy.
Yes, the loan can be provided to the borrowers for their personal purpose by Microfinance companies as per the limits prescribed by RBI(50%).
Yes, Microfinance Company can charge a different rate of interest to its different customers but the difference for individual loans between the minimum and maximum interest rate cannot exceed 4 per cent.
No. this is the main benefit of taking loans from micro finance company that they do not take any collateral security or marginal money in respect of the loans granted.