Domiyance Finance Consultancy LLP

Microfinance Company Registration
Book Consultation @ ₹ 4,999/-

Micro Finance Companies are known as Micro-Credit agencies or microcredit institutions which may be registered as Section 8 Companies subject to RBI approval for microfinance activities in India. We advise and assist in setting up the Micro Finance Company anywhere in India.

Micro Finance company: An Overview

In order to provide easy credit to the society, Microfinance institutions were an initiative taken by the government of India. These companies provide credit facilities to SME and other forms of organizations which find it hard and difficult to secure loan facilities from large financial institutions and banks. Usually the amount of loan provided by a microcredit institution would be up to Rs. 50000/- for rural areas and Rs. 125000 for urban areas. Only Non-banking Finance Companies can be set up as Micro Finance Companies, with the prior approval of the Reserve Bank of India.
 

Package inclusions:

  • Procedure for Microfinance company registration
  • Liaising with the concerned regulatory authorities for microfinance company registration
  • Documentation Support
  • Compliance Services

Checklist to set up a Microfinance Company

A microfinance company can be incorporated as a public or private limited company, for getting established either as an NBFC or Section 8 Company in India. Therefore, before beginning the process of its formation, the members must ensure that the necessary prerequisite conditions have been fulfilled. We have provided an elaborate list of all such conditions below, for your precise understanding.

PrerequisitesNBFCSection 8 company
Approval of RBIMandatoryNot Required
Net owned
funds
Minimum 5 croresNo minimum requirement 
Director
experience
One director must have
experience of more than 10 years in financial
services
No prior experience
required
Limit on loansMaximum of 10% of total assetsUnsecured loan of Rs 50,000 to small businessLoan up to Rs1.25 lakh to dwelling residence
Complexity of Microfinance Company
Registration
All processes involved in forming a company have to be performed. Relatively simple as it is
registered as a non-profit
organization 
Adhering to CompliancesIt has to adhere to all compliances of an NBFC.Adhere to compliance of RBI, but they are less stringent in comparison to NBFC
No of members For a private limited company minimum of 2 For a public limited company minimum of 7Minimum of 2 members
Status of organizationProfit organizationNon-profitable organization

Stepwise procedure of registering a Microfinance company

The following process is required for Micro-Finance Company Registration (MFI-NBFC)

  • Company Registration

    First and foremost the Microfinance Company has to register as a company under the provisions of the Companies Act, 2013. For this SPICe + Form has to be utilized. When the company is initially registered, the type of business structure which is utilized for this form of organization would either be a private limited company or a public limited company. The capital authorized for the entity can be Rs. 1, 25,000/-.

  • SPICe Plus Service

    Usually the above service would be easily carried out by the applicant as the whole process of registration is online. This service would provide name reservation, DIN, Mandatory Issue of the PAN, TAN, EPFO, ESIC and other forms of registration which is required. The following compliances have to be carried out after the above process:

    • If the company is started as a new entity, then the name has to be reserved.

    • All the other compliances related to EPFO, GST, Income Tax, PAN, TAN, Bank Account and professional tax registration (If Required) has to be carried out in compliance with the required law.

  • Application in SPICe Plus

    The applicant has to click on SPICE plus under the respective MCA services. The applicant would be redirected to another page to apply for a new application. If the company already exists then existing application has to be clicked on. Then the applicant has to check the correct category of the company. Under this the sub-category of the company must also be check on. All the activities which are carried out by the company have to be mentioned. Hence if an applicant going for a particular process of microfinance company registration has to specify the industrial activities.

  • Check For Name

    If the name of the company for Microfinance Company Registration is present, then the applicant has to click on auto check to fulfil the requirements related to name of the company. All the other information related to the name of the company must be submitted. Both part A and part B must be submitted. The following details have to be submitted along with the above:

    • Name of the company

    • Location of registered office of the company

    • Activities which are carried out by the company

    • PAN , TAN and other forms of registrations have to be carried out

    • It would be useful to carry out a pre-scrutiny check for the above process related to registration

    • All the particulars in Part B of the PDF has to be downloaded. The digital signature certificates of the directors must be affixed to the forms. All the requisite forms must be downloaded which include the AGILE-PRO, SPICe+MOA and SPICe+AOA, URC-1 and INC-9. These forms must be linked and uploaded online. A request number would be generated after this. The applicant has to provide payment then the information present in the forms would be processed.

  • Capital Raising

    In the next step for Microfinance company registration, the company has to raise about Rs 5 Crore or 2 Crore as per the requirements.

  • Opening a Bank Account

    In the next step the applicant would open a bank account. A certificate related to no lien created would be required for the above process. An application would be presented to the RBI for this form of certificate.

  • Microfinance Company Registration- Apply to RBI

    All the certified copies of the microfinance company have to be provided to the RBI. The following documents or certified copies have to be submitted to the RBI:

    • Incorporation Certificate- Copies

    • Memorandum of Association and Articles of Association

    • Copy of the FD (Fixed Deposit Receipt)

    • Certificate from Bankers Related to No Liens on the Net Owned Fund.

  • Application

    In the next step, the applicant has to make an online registration with the RBI for Microfinance company registration. With this the applicant would receive a ‘Company Application Reference Number’.

  • Submission of Hard Copy

    After this process, the applicant has to submit hard copies with the respective regional office of the RBI. The RBI would carry out scrutiny and respective due diligence to confirm with the requirements.

Process for Registering a Section 8 Company in India

  • Prepare DSC and file Name Approval

    The very first step for Section 8 company registration is to prepare DSC. Apply for Digital Signature Certificate (DSC) as soon as possible. Section 8 companies should contain words like Foundation, Society, Association, Council, Club, charities, Academy, organization, Federation, Institute, Chamber of Commerce, Development and many more.

  • Filing of Section 8 Incorporation Forms on MCA Portal

    After getting approval from the regional director, we will proceed to file the section 8 company registration application with the requisite documents before ROC. Once all clarifications are provided to ROC, the ROC shall issue a Certificate of Incorporation along with a Company Identification Number (CIN). This would be carried out as per the requirements under SPICE plus (Spice +).

  • MOA and AOA file submission

    Once you get the License, you need to draft the Memorandum of Association (MOA) and Article of Association (AOA) to file section 8 company registration applications.

  • PAN, TAN and Bank Account

    You must have your PAN, TAN and bank account ready while going for Section- 8 Company registration in India.

Documents for MFI registration

Documentation is the most significant aspect of filling the application for MFI registration in India. To set up an MFI as an NBFC, a prior approval of the RBI is needed, for which the following documents must be filed with the prescribed application:
  • Duly attested copy of Company Incorporation certificate;
  • Copy of MOA & AOA of the entity;
  • Resolution of the Board regarding the decision to carry out functions related to a microfinance company;
  • Banker’s Report;
  • Bankers Certificate related to No Lien;
  • Report from auditors related to ‘minimum net owned fund (NOF) of the entity or the applicant entity;
  • A certificate of CA related to information of the members or the executives of the company. Along with the above, details of investments in other ‘NBFCs’ as shown in the ‘Performa Balance Sheet’;
  • Educational Certificates and other certificates related to the key management executives and shareholders of the company;
  • PAN for Indian Citizens;
  • Passport size photograph: Not more than ten months old photo of directors and shareholders;
  • ID proof: Copy of Aadhaar card/voter identity card/passport/driving license of directors and shareholders. Aadhaar number is mandatory requirement for any form of registration;
  • Address proof: Electricity bill, water bill, bank statement, gas or telephone bill of shareholders and directors;
  • Copy of the rent agreement- If the premises is rented then a copy of the rent agreement must be provided;
  • Utility Bills such as Electricity bill, water bill, bank statement of the registered office must be provided;
  • KYC or Income Proof Related to Directors and Key Management Executives;
  • No Objection Certificate from the Company;
  • Net worth certificate of the directors;
  • Financial Report related to the Directors;
  • Credit Statement of the Directors and Key Management Executives;
  • Detailed Information related to the risk and evaluation process which is carried out for Microfinance Company Registration;
  • Detailed Structure and Plan of the Organization;
  • Proof of Passport if the national is an Indian. For any foreign nationals apostilled or notarized copies of the passports must be submitted;
  • All the documents which are submitted should not be less than 2 months old.