NBFC Micro- Finance Registration

What is Micro Finance Company Registration?

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. without demanding any collateral security or marginal money. It can provide loansatreasonable rates prescribed by central government and Reserve Bank of India. Micro Finance Companies are a great support to rural and agricultural development and income and employment generation.

How to Start Microfinance Company Registration? 

Microfinance company registration is divided into two broad categories:

  1. Private or Public Limited Company registration.
  2. Approval from Reserve Bank of India for starting the business of Micro Finance.

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.

Documents Required

  • PAN card: In the case of Indian citizens, the PAN card of shareholders and directors. 
  • Passport size photograph: Not more than 10 months old photograph of directors and shareholders.
  • ID proof: Copy of Aadhaar card/voter identity card/passport/driving license of directors and shareholders
  • Rent agreement: If you have rented property, then a copy of rent agreement
  • Address proof: Electricity bill, water bill, bank statement, gas or telephone bill of shareholders and directors
  • Registered office proof: Electricity bill, water bill, bank statement, gas or telephone bill of the registered office address
  • NOC from the owner: No objection certificate is needed from the owner of the registered office

Procedure for NBFC-MFI registration

There are steps that have to be followed while registering NBFC-MFI:

  • Company register: Company registered under this category must be a public limited company or a private limited company. You can register a private limited company with having 1 lakh rupees only including two members.
  • Capital raise: as prescribed by RBI, you must have minimum 5 crore rupees as a net owned fund for NBFC-MFI registration. you can raise authorized capital and paid-up capital to 5 or 2 crores according to the requirement.
  • FD (Fixed deposit): you can deposit the amount of Rs. 5 or 2 crores in a bank as FD and can obtain a certificate of no line from the bank.
  • Apply RBI for License: you can fill by online application for the registration of NBFC with the documents required. The hard copy of the application form must be submitted to the regional office of Reserve bank of India along with the documents.