MICROFINANCE COMPANY REGISTRATION

REGISTER A MICROFINANCE COMPANY

Keynotes on Microfinance Company Registration

  • It takes 10 to 15 days for Microfinance Company Registration
  • Completely online service – No physical presence required
  • No minimum capital requirement
Need Service ? Apply Now

Microfinance Company Registration Services
By NYAY SARTHI INDIA FILINGS

What is a Microfinance Company?
A specialized financial institution that provides:
✓ Small-ticket loans (typically under ₹50,000)
✓ Financial access to unbanked/underbanked segments
✓ Support for micro-entrepreneurs and low-income households

Our Registration Services Include:
• End-to-end licensing assistance
• RBI compliance guidance
• Documentation support

Why Choose NYAY SARTHI INDIA FILINGS?
✔ Expert Team: Specialized in microfinance regulations
✔ Transparent Process: Clear step-by-step guidance
✔ Ongoing Support: Post-registration advisory services

Empower communities through ethical microfinance – Let us handle your company registration.

Microfinance Company Registration Procedure in India

Step-by-Step MFI Registration Process
By NYAY SARTHI INDIA FILINGS

1. Company Incorporation**
✓ Register as Private/Public Limited Company under Companies Act 2013
✓ Minimum initial capital: ₹1,00,000

2. Capital Enhancement
• Increase authorized capital to ₹2-5 crore
• Strictly through equity shares (preference shares prohibited)

3. Bank Formalities
– Deposit capital as fixed deposit
– Obtain bank’s “No Lien” certificate

4. RBI Application
Submit to Reserve Bank of India:
✓ MOA extract (main object clause)
✓ Incorporation certificate
✓ Bank FD receipt & no-lien certificate
✓ Banker’s report

5. Online Submission
• File application via RBI portal
• Obtain Company Application Reference Number

6. Hard Copy Submission
– Submit physical documents to regional RBI office
– Receive Certificate of Commencement post-verification

Essential Documents Checklist
• Notarized MOA & AOA
• Board resolution for MFI registration
• Auditor’s NOF confirmation
• CA certificate on corporate affiliations
• Directors’ qualification proofs

NYAY SARTHI INDIA FILINGS ensures:
✔ RBI-compliant documentation
✔ End-to-end process management
✔ Post-registration advisory

Documents Needed for Micro Finance Company Registration

Documentation Requirements for Shareholders/Directors
By NYAY SARTHI INDIA FILINGS

Mandatory KYC Documents:
✓ Identity Proof:

  • PAN card copy (self-attested)

  • Aadhaar card copy (self-attested)

✓ Address Proof (Any One):

  • Bank statement (last 3 months)

  • Mobile/telephone bill (not older than 2 months)

  • Utility bill (electricity/water/gas)

✓ Additional Requirement:

  • Recent passport-size photograph

NYAY SARTHI INDIA FILINGS Tip: All documents must be clear, legible copies without alterations.

Registered Office Documentation Requirements
By NYAY SARTHI INDIA FILINGS

Essential Documents:

  1. Address Proof (Any One):
    ✓ Electricity bill (not older than 2 months)
    ✓ Gas/water utility bill
    ✓ Municipal tax receipt

  2. Ownership Proof:
    • Property deed/lease agreement
    • Latest maintenance bill

  3. No Objection Certificate (NOC):

    • From owner (if rented premises)

    • Format: On ₹100 stamp paper with notarization

NYAY SARTHI INDIA FILINGS ensures:
✔ Document verification for compliance
✔ NOC drafting assistance
✔ Seamless registration process

Interest Rates on Loans by Micro Finance Companies like NGO

Permissible Charges for Microfinance Companies
By NYAY SARTHI INDIA FILINGS

1. Interest Rate Cap
• Maximum APR: 26% (including all fees)

2. Processing Fees
✓ Strictly limited to 1% of loan principal
✓ No hidden administrative charges permitted

3. Insurance Premiums
• Only actual costs allowed for:

  • Life insurance

  • Health coverage

  • Group policies
    • Zero mark-up permitted (RBI compliant)

NYAY SARTHI INDIA FILINGS ensures full compliance with RBI microfinance regulations.

Calculation of Rate of Interest for Micro Finance

Microfinance Interest Rate Calculation
By NYAY SARTHI INDIA FILINGS

Regulatory Pricing Framework:
MFIs must charge the lower of:

  1. Base Rate Formula
    ✓ Last reported average base rate: 9.35% (April 2017)
    ✓ Maximum = 9.35% × 2.75 = 25.71%

  2. Cost-Plus Formula
    ✓ Actual cost of funds + 12% margin

Key Compliance Requirement:
• Final interest rate must not exceed 26% (including all charges)

NYAY SARTHI INDIA FILINGS ensures accurate rate calculation per RBI guidelines.

Accepting Deposits under Micro Finance Company

Funding Guidelines for Section 8 Companies & NBFCs
By NYAY SARTHI INDIA FILINGS

For Section 8 Microfinance Companies:
✖ Deposit Acceptance: Strictly prohibited
✓ Permitted Funding Sources:

  • Initial capital (minimum ₹1 lakh)

  • Donations/grants

  • Retained earnings

For NBFC Registration:

  1. Initial Phase:

    • Register as non-deposit taking NBFC (₹5 crore capital)

    • Operate for 2+ years with clean track record

  2. Deposit-Taking Status:
    • Separate RBI approval required
    • Additional net owned fund requirements apply

Strategic Recommendation:
→ Begin as Section 8 Company to:

  • Test operational capabilities

  • Build financial credibility

  • Transition to NBFC later

NYAY SARTHI INDIA FILINGS provides:
✔ Regulatory-compliant structuring
✔ RBI licensing support
✔ Funding strategy advisory

Micro Credit Loans provided under Micro Finance Company

Key Features of Microfinance Loans
By NYAY SARTHI INDIA FILINGS

Loan Structure:
✓ Type: Unsecured (no collateral)
✓ Repayment: Weekly/Monthly installments
✓ Interest Range: 20-26% p.a.

Critical Regulations:

  1. Interest Calculation:

    • Only reducing balance method permitted

  2. Rate Variations:

    • Max 4% differential between customer categories

  3. Transparency Measures:
    • Mandatory loan cards with full terms
    • Effective interest rate display in all offices

  4. NPA Classification:

    • 90+ days overdue = Non-performing asset

    • Exemption: Section 8 companies

NYAY SARTHI INDIA FILINGS ensures full compliance with RBI microfinance guidelines.

Compulsory Compliances for Micro Finance Company

Essential Compliance for Microfinance Companies
By NYAY SARTHI INDIA FILINGS

1. Companies Act Requirements
✓ Mandatory for Section 8 companies
✓ Includes governance, reporting and auditing standards

2. RBI Guidelines
• Applicable even without formal registration
• Covers:

  • Fair practices code

  • Interest rate caps

  • Transparency norms

3. Additional Regulations
✓ PMLA (Anti-Money Laundering) compliance
✓ State-specific microfinance laws
✓ Data protection rules

NYAY SARTHI INDIA FILINGS provides:
✔ End-to-end compliance management
✔ Regulatory gap analysis
✔ Audit readiness support