Microfinance Company Register

REGISTER A MICROFINANCE COMPANY

Keynotes on Microfinance Company Registration

  • It takes 10 to 15 days for Microfinance Company
  • Completely online service - No physical presence required.
  • No Minimum Share Capital required
 
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Microfinance Company Registration

What is Micro Finance Company?

A Micro finance company is usually called Micro Credit Organization which deals in common loan. It is less than Rs. 50000 to different small companies and households that have no access to banking channels or not eligible to get loans.

At Take Job Home Placement Consultant , we have energetic team of professionals to take care of your Microfinance company registration. Our motto is to offer complete customer satisfaction with complete transparency and cost-effective price. Get top Microfinance company registration consultant and we believe that clients should get services after sales took place. That’s why we are committed to offer wonderful after sale service to coup with the needs of our clients.

Microfinance Company Registration Procedure in India :

The first step in MFI (Microfinance Institution) registration is to incorporate a company either as Private Limited Company or Public Limited Company according to Companies Act, 2013. At first, the company can be incorporated with the capital of Rs. 1,00,000.

The next step is to raise authorized and paid up share capital up to Rs. 5 Crore or Rs. 2 Crore as the condition may be. It must be raised in the type of equity Share Capital and not Preference Share Capital.

After registration of the company, the amount obtained shall be deposited in a bank account in the form of Fixed Deposit. After this, a certificate of no lien shall be acquired from the bank. This certificate shall be attached with an application that will be submitted with the RBI.

The next step is to get all the certified copies and submit it with the RBI for performing business Operations. Following are needed to be submitted :

Copy of an extract of the main object clause in MOA

Copy of Certificate of Incorporation

Bankers Certificate of no lien in relation to Net Owned Fund

Copy of fixed deposit receipt Bankers Report

An online application will be filed with the RBI for Microfinance Company Registration. After filing of an application, the company will obtain Company Application Reference Number.

Once an online application is filed, a hard copy of the application with the required documents will be submitted with the regional office of the Reserve Bank of India. On obtaining the application, RBI will carry out due diligence and after satisfaction, RBI will give a certificate of commencement of business.

Necessary Documents for MFI Registration in India :

Certified copy of Memorandum and Articles of Association (MOA & AOA) of the Company

Duly Certified copy of Certificate of Incorporation of a company

Board Resolution corresponding to the proposed Microfinance company registration

Report of Banker

Auditors report about receiving of the minimum net owned fund (NOF) of the applicant company

A certificate of Chartered Accountant about details of associate/group/ holding companies/ subsidiary with the details of investments in other NBFCs as displayed in the Performa Balance Sheet

A certified copy of the professional qualification and highest educational of all the proposed directors of an applicant company

Documents Needed for

Micro Finance Company Registration

Capture

Interest Rates on Loans by

Basically, there are three kinds of charges that can be imposed by the Micro Finance Company.

The interest Charge – The average rate of interest should not be exceeded by 26%.

The Processing Charge – The processing charge should not exceed 1% of the gross loan amount.

Insurance Premium – Only the actual cost of insurance for life, group, health and others is to be charged and none of extra money is permitted according to RBI policy.

Calculation of Rate of

Interest for Micro Finance

The rate of interest charged by Micro Finance Companies should be which one is lower :

Average base rate multiplied by 2.75%

Or

Cost of funds along with 12% margin

According to press release on 1st April, 2017, the average base rate was 9.35%.

Accepting Deposits under

Micro Finance Company

Under Section 8 Company, there is no permission to accept deposits. Besides the company needs to invest their own capital and commence your micro finance business. In addition, funding may be enhanced by collecting donations.

If you want to register a NBFC company and want to make an investment of Rs 5 crore into it, there is no acceptance to deposits. According to RBI process, NBFC non deposit taking Company should be registered initially. Afterwards application must be done for deposit taking status from the RBI (Reserve Bank of India).

If you plan to make registration of your own NBFC, it is suggested to begin with Section 8 Company. Skills are required to be tested and then move further.

under Micro Finance Company

Micro Credit Loans provided

Under Micro Finance Companies, loans are not very difficult. Unsecured loans are given against weekly or monthly repayments. Interests are imposed mostly in between 20% to 26%. In addition, following features are also crucial :

  • The interest on loan is to be imposed on reducing balance method.
  • Differential rate of interest to the customers can be imposed by NBFC but difference should not exceed 4%.
  • A loan card should be issued to each member of the companies narrating all the terms and conditions and rate of interest.
  • The effective rate of interest must be shown by the micro finance companies in all the offices
  • If there is not any repayment within 90 days, same should be considered as non performing asset. Although rules of provisions are not applicable for Section 8 companies

Compulsory Compliances for Micro Finance Company

There are a number of compliances that are needed to be complied by Micro Finance Company. Following are the most important compliances :

Section 8 company requires fulfilling the Company Act like any other business.

Company is needed to meet the terms and conditions of RBI even if this is not important to register with the RBI.

There are certain other laws that are to be satisfied also such as PMLA and others.