Micro Finance Company

What is a Micro Finance Company in India?

Microfinance companies are financial institutions that provide small-scale financial services, including credit and savings, primarily targeting the poor in rural, semi-urban, and urban areas. These services aim to assist individuals in engaging in economic activities, reducing vulnerability to income shocks, managing consumption patterns, fostering savings habits, and promoting self-empowerment.

In India, two types of microfinance companies can be registered:

• NBFC- Micro Finance Company
• Section 8 Micro Finance Company

Prerequisite of a Micro Finance Company in India

Steps to Register Microfinance Company as an NBFC (Non-Banking Financial Company) in India

• Incorporate Your Company: Incorporate your Microfinance Institution (MFI) as either a Public Limited Company or a Private Limited Company based on your business needs with minimum capital.

• Ensure Capital Adequacy: Ensure your company meets the minimum capital requirement before applying for the RBI license. The Net Owned Funds (NOF) must be at least Rs. 5 crores (Rs. 2 crores for North Eastern states). This is crucial for demonstrating financial stability and capability to the RBI.

• Deposit Capital: Deposit the required capital in a fixed deposit (FD) account in any scheduled commercial bank under the company's name. Obtain a No Lien Certificate from the bank, which indicates that the funds are free of any encumbrances and can be used for the intended purpose.

• Apply for RBI License: Digitally download the RBI license application form from the official RBI website. Fill out the form manually and scan it. Submit the scanned application form along with all required documents online. Upon successful submission, an application reference number will be generated for tracking purposes. Submit a hard copy of the digital application, including the application reference number and all supporting documents, to the RBI's Regional Office. The regional office will review the application and forward it to the Central Office of the RBI for further examination and approval and issue the license.

Steps to Register Microfinance Company as Section 8 Company

• Digital Signature Certificate (DSC): Obtain DSCs for the proposed directors, as these are required for digital filings.

• Name Approval: Select a unique name for your company and get it approved by the Ministry of Corporate Affairs (MCA) by filling web form RUN.

• Document Submission: Prepare and submit the Memorandum of Association (MoA) and Articles of Association (AoA) with finance object along with other necessary documents.

• Filing with RoC: File the web form INC-32 along with MOA, AOA and KYC documents with the Registrar of Companies (RoC).

• Certificate of Incorporation: Upon approval, receive the Certificate of Incorporation, which confirms the registration of your Private Limited Company.

• Obtain PAN/TAN: PAN & TAN of the company will be issued along with incorporation certificate.

Required Documents to Register Micro Finance Company - NBFC in India

• Certificate of incorporation along with MOA and AOA of Company
• Auditor’s Certificate on Net Owned Fund
• Banker’s Certificate of No Lien on Fixed Deposit
• KYC of Directors along with passport size photograph, educational documents & relevant work experience in the financial sector
• Banker’s report about the company
• CIBIL Credit Report, income proof & CA certified net worth certificate of the organization
• Organization Structure Plan

Why Choose E Accountax Manager for Microfinance Company Registration in India?

• Expert Guidance: E Accountax Manager provides expert guidance throughout the registration process, from documentation to final approval. Our team of professionals has extensive experience in handling the complexities of NBFC and Section 8 company registrations.

• Comprehensive Services: We offer comprehensive services that cover every aspect of the registration process, including:

  • Incorporation of your company
  • Ensuring capital adequacy
  • Documentation and application preparation
  • Filing applications with the RBI and ROC
  • Compliance with regulatory requirements

• Hassle-Free Experience: Our team manages all the administrative and procedural tasks, allowing you to focus on your core business activities. We handle:

  • Obtaining DSC and DIN for directors
  • Drafting and filing MOA and AOA
  • Coordinating with banks for capital deposit and No Lien Certificate
  • Online and offline application submissions

• Timely Processing: With our efficient processes and deep understanding of the regulatory environment, we ensure timely completion of each step, minimizing delays and ensuring that your Microfinance Company is up and running as quickly as possible.

• Compliance Assurance: E Accountax Manager ensures that all legal and regulatory compliances are met, reducing the risk of future legal complications. We keep abreast of the latest RBI guidelines and Companies Act provisions to provide accurate and up-to-date compliance advice.

• Customized Solutions: We understand that each business has unique needs. Our services are tailored to meet the specific requirements of your Microfinance Company, whether it’s an NBFC or a Section 8 company.

• Post-Incorporation Support for Micro Finance Company: Our support doesn’t end with the issuance of the license. We provide ongoing support for compliance, reporting, and any other regulatory requirements, ensuring your Microfinance Company remains compliant and successful.

Conclusion

Choosing E Accountax Manager for your Microfinance Company registration in India ensures a smooth, efficient, and compliant process. Our expertise, comprehensive services, and dedicated support make us the ideal partner to help you build your dream business. Contact us today to get started.