Microfinance Company is also known as a Micro Finance Institution. It is a type of Company that provides Financial Services like, Loans, Credit, Insurance, and Savings to small business entrepreneurs and small enterprises.
Micro finance is a type of non–deposit accepting NBFC. It provides small financial support to people with low income and in rural and semi-urban areas. Micro Finance Companies are eligible to provide a loan or credit of up to 50,000 in a rural area and Rs. 1,25,000 in urban areas to small entrepreneurs, enterprises, and people with the low-income group.
It provides loans to the small businessman, agriculturists, horticulturists, farmers, etc. demanding no collateral security or marginal money. It can provide loans at reasonable rates prescribed by the central government and Reserve Bank of India. Micro Finance Companies are a great support to rural and agricultural development and income and employment generation.
Microfinance company registration is divided into two broad categories:
A microfinance company must have a minimum capital of Rs. 5 crores. For North east India, the minimum capital must be of Rs. 2 crores only. This amount is to be deposited in a bank account opened in the name of the company as fixed deposit.
There are steps that have to be followed while registering NBFC-MFI:
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