Micro Finance Company Registration
Micro Finance Company Registration
(No Hidden fee)
There are many forms a microfinance organisation can take depending upon your interests: trust, NBFC MFI, Section 25 company, Society or a cooperative. Business starter helps to provide microfinance registration license and also provide best consultancy service for microfinance business registration and legal support within a limited time span and low cost.
Small businesses and house woman don’t get the loan from the banks due to lack of proper facilities and documentation. To help them in the funding, various people and nearby area often fund these business and house women in the small amount, usually less than Rs.50,000. This small funding is known as Micro finance or sahukari business.
Micro Finance Company Registration
Microfinance institutions lend money to the same target segment, viz lower income households. That’s what basically Microfinance means. Lending credit to lower income and unbanked population.
MFIs can be of different legal forms, viz NGO (Society), trust, section 8 company, cooperative society, NBFC-MFI etc and fall under different regulatory bodies (state govt, central govt, RBI etc).
In my view, the easiest way to get into Microfinancial services is to open a credit cooperative society. The registration is easy and starting the operations requires very few regulatory obstacles. All you need is a board of directors or governors to guide the society and a few staffs to look after the daily operations.
What are the Documents Required for Microfinance business Registration ?
The minimum documents required for registration at least two directors or main members are as follows:
> Copy of PAN CARD
> ID Proof (Driving License, Passport, Aadhaar Card, Voter ID) – any one
> Address Proof (Bank Statement, electricity bill, Mobile Bill, Telephone Bill) –anyone
> Passport Size photo
Apart from the above, we need the following documents for registered office registration:
> Rent agreement or ownership documents
> Electricity bill
> A copy of No Objection Certificate (NOC) from the owner.
What are the Requirements for microfinance Registration ?:
1. At least two shareholders
2. Minimum two directors
3. Shareholders and Directors could be same.
4. At least one Director should be Indian resident
5. There is no minimum capital required.
6. Registered Office Address Proof (Rent agreement if the premises is not owned by the company)
7. Documents claiming the ownership such as Sale Deed or House Tax receipt along with an NOC.
What are the Legal Structure of Micro Finance Business?
1. Non-Banking Finance Company (duly registered with RBI)
2. Section 8 Microfinance Company
> Non-Banking Finance Company (NBFC): A company registered with RBI with a motive to run a microfinance institution is known as NBFC –MFI. Further, people generally believe that any NBFC is authorised to take deposits as well.
However, the same is not true. All NBFC are not authorised to take deposits from the general people. Further, if any NBFC needs deposits, then it needs to get a separate status from the Reserve Bank of India (RBI).
To get the deposit taking status, a separate application needs to be filed with the Reserve Bank of India (RBI).
> MicroFinance Business through Section 8 Company: This is perhaps the cheapest way to register a Micro Finance Company in India. If you are interested to start a micro finance business, then you might start with section 8 company.
What is the Benefits of microfinance business Registration as NGO
1. NO MINIMUM PAID UP CAPITAL REQUIREMENT: As per Companies Act, 2013 unlike private and public limited companies, Section 8 microfinance Company do not require any minimum capital contribution for incorporation. They can commence there business without any share capital. The fund required for business can be brought in the form of donation and subscription from public and members of the microfinance Company.
2. TAX DEDUCTION: Since Section 8 microfinance Companies are non-profit making companies they are exempted from certain income tax provisions. They are also given numerous deductions and benefits. Individual Donating Money in Section 8 companies also avail the benefits of deduction under Section 80G of income Tax Act, 1961.
3. NO NEED TO USE TITLE: Unlike Private Limited company which uses ‘Private Limited’ or “limited” as title after its name, Section 8 Company is not required to add any title to its name.
4. NO STAMP DUTY PAYABLE: A section 8 microfinance Company is exempted for the payment of stamp duty applicable for registration as applicable in case of other structures such as private limited or a public limited company.
5. CREDIBLE: A Microfinance business registered as companyhas more credibility as compared to any other Non-profit organization structure be it a Trust or Society. As it is a licensed by the central government. It has more stringent regulations such as no change in MOA and AOA can be done at any stage or situation in a Section 8 microfinance Company. A microfinance company due its strict compliances as regard to functioning has a more reliable image in comparison to other legal structures.
What is the Procedure to Register Microfinance business ?
A Non-profit organization can be registered as a Microfinance under Section 8 of the Companies Act, 2013. IT can also be registered as Trust or a Society. Section 8 Microfinance company can be incorporated for promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object, provided it intends to apply its profits.
Steps to register microfinance company are :
1. Get Digital Signature Certificate (DSC) of all members of microfinance.
2. Get Director Identification number (DIN) of all Directors by using DSC.
3. Suggest at least Six Company name. We will do search for name availability.
4. Apply to ROC for name approval.
5. Once name is approved by ROC File application to Central Government in Form INC -12 for grant of License to start Section 8 Company.
6. Once Central Government issues License file Incorporation document with ROC like MOA AOA Consent of Director, Affidavit and declaration from directors etc.
7. Once Incorporation form is approved by ROC, ROC shall issue Certificate of Incorporation with PAN and TAN No.
What are the time period for registering Microfinance business ?
Time Required for Incorporation of Section 8 Company Shall be 30-60 days, depending on government approval.
MICROFINANCE as NBFC:
What is the Procedure to Register the Micro Finance Company (MFI) as NBFC?
The procedure to register a Micro Finance Company is complex as it involves the license from the Reserve Bank of India (RBI) and since RBI is involved in this process, the whole process could take months to complete. However, the license of Reserve Bank of India (RBI) is so valuable that waiting for months is a real worth. Let us understand the procedure in brief:
1st Step: Register a Company:
This is the first step to register the Micro Finance Company (MFI) in India. It could be a private limited company or a public limited company. Once you have registered a company, then we can proceed for next step. Further, initially, a company could be registered with Rs.1 lakh capital.
2nd Step: Raise Authorised and Paid up Capital to two Crores:
The next step is to raise the share capital both authorised and Paid up to Two Crores Rupees. This is because to register an NBFC in India, the minimum net worth required is Rs.2 crore.
3rd Step: Deposit Rupees Two Crore in Fixed Deposit and obtain Certificate:
After raising the capital amount, the next step is to deposit the sum of Rs.2 crore in Fixed Deposit and obtain a certificate of no lien from the bank. This shall be attached with the application when filed with the Reserve Bank of India (RBI).
4th Step: Get all the certified Copies and complete the requirement checklist for RBI registration:
Once, you are done with step 3, the next step is to complete the requirement list for RBI registration. The requirement for Micro Finance Company Registration is as follows:
- Certified Copies of Certificate of Registration
- Certified copies of an extract of only the main object clause in the MOA relating to the financial business.
- Copy of Board resolution
- A copy of Fixed deposit receipt & bankers certificate of lien indicating balances in support of Net Owned Funds (NOF).
- Bankers Report for applicant company, group companies.
5th Step: Fill online application:
The next step is to fill the online application for NBFC registration as a Micro Finance Company (AFC). Once the online application is filed, the company gets a Company Application Reference Number.
6th Step: Submit the Hard Copy to the Regional Office of Reserve Bank of India (RBI) office:
Once the application is filed, a hard copy of the application along with all the necessary documents are to be sent to the regional office of the Reserve Bank of India.
How Business Starter will help get Microfinance Business ?
Business starter providing registration services of microfinance bsuiness under all kind of registration methods including company, trust , credit co operative society for non profit working helps to get government license to start microfinance MFI business.
Business starter provides documentation consultancy for microfinance to get tax exemptions and tax rebate in donation receive and tax exemption for income of NGO. There are other many kind of documentation prepare that they are required for registering microfinance sahukari business license that they are regular process of business starter licensing experts.