Micro Finance Registration
Our Price
Market Price : INR 45,500
Our Price : INR 23,999** Only
Savings : INR 1,800
Govt Fees : Inclusive in the price
Time for Registration : 7 to 10 Working Days
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Micro-Finance Company
The Micro finance Company is basically the financial institutions that provide small-scale financial services in the form of loan, credit or savings. These companies are introduced to ease the credit system for small businesses as they don’t get a loan from banks due to their complex process. Therefore it is commonly named as a Micro-credit, Micro-benefit organization. They offer small loans to various small businesses or households that do not have access to formal banking channels or eligibility for loans.
They provide small loan upto Rs.50000 for business purpose & Rs.125000 for residential dwelling. The simplest way to register a Microfinance Company in India is to register the Section-8 Company with MCA (Ministry of Corporate Affairs). Without charging any marginal money or guarantee security.
It can give loans at inexpensive rates directed by the RBI and central government. They are a huge support to all rural and agricultural development including income and employment creation. There are basically 2 types of microfinance companies that are allowed in India, one is which has to be registered with the RBI.
Elegibility
1. Minimum Number of Partners:
At least two Persons are required to form any Company. So in the Company also, at least two persons are required .
2. Residential Status:
Any person can be Subscriber in the Section 8 Company either resident, non resident, Indian National, or Foreign National. It is also not mandatory that the subscriber should be Individual, it could either be Individual or Body Corporate.
Whereas, only Individual could be Director in the Section 8 Company.
3. Capital Requirement:
Companiies Act, 2013 does not discloses any amount of minimum capital, hence no limit has been imposed on capital.
4. Purpose of Section 8 Company Formation:
This Section 8 Company is formed for Micro-Finance purpose.
5. Compulsory Clause:
At least one director and subscriber in the Section 8 Company should be Indian Resident who is responsible for the operation of the Company.
Documents for Micro-Finance Company
Documents and Details Required for Company Registration
(Scanned Copy of Self Attested Documents are required)
Documents Required of Proposed Directors and Promoters:
- Copy of PAN Card of the Proposed Promoters.
- Copy of ID Proof of the Proposed Promoters(VoterID/Passport/Driving License/Aadhar Card).
- Copy of Residential Proof of the Proposed Promoters(BankStatement/Electricity Bill/Telephone Bill/Mobilebill).
- Passport Size Photographs of the Proposed Promoters.
Documents For Registered Office
- Electricity Bill/ Water Bill in the Name of Office Owner
- Rent Agreement & NOC (if office is on rent)
- NOC (If office is self-owned or owned by parents)
Information Required Except Documents:
- Proposed names of the company (Maximum 4 Names).
- Main objects of the proposed company(Brief write-up).
- Designation Description of of the Proposed Promoters.
- Authorised Share Capital of the Company and Paid up capital of the Company.
- Educational qualification, Place of Birth of the Proposed Promoters.
- E-mail ID, Mobile Number and Occupation of the Proposed Promoters.
- Please provide Director Identification Number (DIN) of of the Proposed Promoters, if obtained already. If not, then DIN will be allotted only at the time of Incorporation of Company.
- Digital Signature Certificate (DSC) of of the Proposed Promoters, if available.
Procedure of Micro-Finance Company
The process for incorporation of a Micro-Finance Company can be divided into following steps:
Digital Signature
Digital signature certificate must be created and approved by the licensed companies in India, e.g Vsign, Emudhra, Sify, etc. It is mandatory for the acting director and for nominee both. Application for DSC would require passport size photos of the applicant, identity proof and address proof.
Name Availability
Application for name reservation can be submitted to the MCA. Upto 2 names at a time can be applied which further could be rectified one again if not approved I the first time. The name should comply the norms for name approval guidelines.
Incorporation
After obtaining name approval, incorporation application is required to be filed to the ROC on mca.gov.in. I requires multiple details and documents e.g Spice Part B, Memorandum of Association (MOA), Articles of Association (AOA), INC-9, Agile Form. Further, the identity proof, address proof and residence proof of the member and nominee would be required. In addition to the MOA, AOA, identity proof, address proof, other incorporation documents like affidavits and declaration of the sole promoter must be submitted.
On filing for incorporation, approval is granted by the Registrar of Companies (ROC). In case there are any issues with the documents submitted, the application for incorporation can be resubmitted.
Benefits of Micro-Finance Company
Advantages of a Micro Finance Company
Government of India and the Reserve Bank of India have created conducive policy framework for Microfinance Institutions (MFIs) to provide necessary legitimacy and impetus to the sector. The following are the benefit of Micro Finance Business. Provide access to funding Encourage self-sufficiency and entrepreneurship It offers a better overall loan repayment rate than traditional banking products. Strengthen financial condition for some days till situation gets better. Help in meeting credit needs for such a population range from emergency loans, consumption loans, business loan, working capital loan, housing etc. Besides, limited liability and minimal statutory compliances, Micro-Finance Company offer the following advantages:
Separate Legal Entity
An entity means something which has a real existence; a thing with distinct existence. A company is a legal entity and a juristic person established under the Act. A juristic person is a person who is not a natural person or human being. Therefore a company form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts. Hence, a pvt ltd company is a legal entity separate from that of its members.
Perpetual Succession
A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership. Perpetual succession is one of the most important characteristics of a company.
Limited Liability
Limited Liability means the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company’s debts is limited. In other words, the liability of the members of a company is limited only to the extent of the face value of shares taken up by them. Therefore, where a company is limited by shares, the liability of the members on a winding-up is limited to the amount unpaid on their shares.
Owning Property
A company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern. The shareholders are not the owners of the company’s property. The company itself is the true owner.
Capacity to sue and be sued
To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a legal action in his/her own name against another in that person’s name, a company being an independent legal entity can sue and also be sued in its own name.
Frequently Asked Question
A customer is required to pay only those charges which are explicitly mentioned in the factsheet provided by the lender. Besides this, the customer should also note the following:
- There is no pre-payment penalty on microfinance loans.
- Penalty, if any, for delayed payment can be applied only on the overdue amount and not on the entire loan amount.
- Any change in interest rate or any other charge shall be informed to the borrower in writing well in advance and these changes shall be effective only prospectively.
The customer should keep in mind, among others, the following:
a) There is no requirement of keeping any deposit/ margin/ collateral/ primary security with the lender at any stage of the microfinance loan.
b) Lender is required to provide a loan card to the borrower in a language understood by the borrower which should have following information:
Information which adequately identifies the borrower;
Simplified factsheet on pricing;
All other terms and conditions attached to the loan;
Acknowledgements by the lender of all repayments including instalments received and the final discharge; and
Details of the grievance redress system, including the name and contact number of the nodal officer of the lender.
c) Purchase of any non-credit products is purely voluntary. Fee structure for such products shall be explicitly communicated in the loan card.
d) Training provided by the lenders is free of cost.
he effective date of these directions is April 1, 2022. However, in view of implementation related difficulties expressed by some regulated entities (REs), REs are advised to implement these directions completely at the earliest on best effort basis, but not later than October 1, 2022.