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MicroFinance Company Registration
Micro Finance Company Registration is also known as micro finance institution(MFI). It is a type of company that provides credit, loan facility, insurance and savings to small business entrepreneurs or to small business enterprises. It provides small support to a person who are in the need of loan in semi- urban as well as in Rural areas. It can only provide loan or credit facility upto Rs. 50,000/- in rural areas and upto Rs 1,25,000/- in Urban areas to small entrepreneurs or to a person with a low Income. Therefore, it provides loan to a businessman, agricultureist, farmers etc without demanding any collateral security or marginal money. Banks and RBI has given authority to these Finance institution to provide loans or credit services to persons at a reasonable rate prescribed by these banks.
How to start Micro-Finance Company Registration?
It 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 capita of Rs. 5 Crores. However in North east India requirement of minimum capital is Rs. 2 crores, capital is required in these kind of Companies. This amount is to be deposited in a bank account opened in a name of a company as Fixed deposit.
Anyone who wants to register a Micro Finance Company, first and foremost they need to from a Company as per Companies Act, 2013. And after a getting a certificate of incorporation you need to deposit a sum of Rs. 5 Crores or 2 Crores as the case may be as their Fixed deposit by opening a Bank account on the name of the company. After doing all this you need to submit an application to the Reserve Bank of India, in a prescribed format for NBFC-MFI registration along with all the documents. The Application will be submitted online and the Hard Copies of all the documents needs to be submitted in the office of Regional office of Reserve Bank of India. After Receiving all the Documents the Reserve Bank of India will conduct a due diligence. And if the apex court is satisfied with all the documents and the information given is true then it will issue a certificate of commencement of business to the Microfinance Company.
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 capita of Rs. 5 Crores. However in North east India requirement of minimum capital is Rs. 2 crores, capital is required in these kind of Companies. This amount is to be deposited in a bank account opened in a name of a company as Fixed deposit.
Anyone who wants to register a Micro Finance Company, first and foremost they need to from a Company as per Companies Act, 2013. And after a getting a certificate of incorporation you need to deposit a sum of Rs. 5 Crores or 2 Crores as the case may be as their Fixed deposit by opening a Bank account on the name of the company. After doing all this you need to submit an application to the Reserve Bank of India, in a prescribed format for NBFC-MFI registration along with all the documents. The Application will be submitted online and the Hard Copies of all the documents needs to be submitted in the office of Regional office of Reserve Bank of India. After Receiving all the Documents the Reserve Bank of India will conduct a due diligence. And if the apex court is satisfied with all the documents and the information given is true then it will issue a certificate of commencement of business to the Microfinance Company.
FAQ
Common List Of Questioner That Our Customer Ask From Us -Solved !
What are documents required to be filed along with the Application?
Following are the documents which are required to be filed at the time of submitting of the application to the RBI are given below-
1.Certified true copies of Certificate of Incorporation of Businesses and certificate of commencement of business of the concerned company.
2.Certified copy of up to date Memorandum of Association And Articles of Association.
3.Certified true copies of Board resolution in supporting the registration of the company, along with a declaration that the company will comply with prescribed rules and regulations and compliances that are directed by the Reserve Bank of India.
4.Banker’s report relating to dealing made with the company.
5.An auditor's’ report stating that the applicant compay owns the minimum capital required.
6.Certified copies of educational and Professional qualification of al the Director an Experience certificate i the sector of Financial Services if any.
A Micro finance Company can charge different rate of Interest from different customers, but the variation between the minimum and maximum interest rates shall not exceed 4 percent for individual loans.
1.Certified true copies of Certificate of Incorporation of Businesses and certificate of commencement of business of the concerned company.
2.Certified copy of up to date Memorandum of Association And Articles of Association.
3.Certified true copies of Board resolution in supporting the registration of the company, along with a declaration that the company will comply with prescribed rules and regulations and compliances that are directed by the Reserve Bank of India.
4.Banker’s report relating to dealing made with the company.
5.An auditor's’ report stating that the applicant compay owns the minimum capital required.
6.Certified copies of educational and Professional qualification of al the Director an Experience certificate i the sector of Financial Services if any.
A Micro finance Company can charge different rate of Interest from different customers, but the variation between the minimum and maximum interest rates shall not exceed 4 percent for individual loans.
What are the limitations imposed on NBFC which does not qualify as NBFC-MFI Registration?
Such NBFC must not have more than 15 percent of its total assets as loans meeting, “Qualifying assets” criteria as defined in the directions.
Can NBFC-MFI can lend funds for personal use?
A part i.e. 50 percent of the aggregate amount of loans may be extended for other purposes such as housing repairs, education medical and other emergencies. However aggregate amount of loan given to a person is for income generation.
What procedure is to be calculation of interest cost ( cost of funds) and interest income by NBFC-MFIs?
The interest cost will be calculated on average fortnightly balances of outstanding borrowings and interest income is to be calculated on average fortnightly balances of outstanding loans portfolio of qualifying assets.
What are the processing charges hat MFI can levy on its customers?
Processing charges shall not be more than 1 percent of gross loan amount. Processing charges need not to be included in the margins capital. Further MFI-NBFC can recover only the actual cost of insurance for group, or livestock, life, health, for borrower and spouse.
What are the charges that a customer is supposed to pay for the loan from an NBFC- MFI?
There are only three components in the pricing of the loan Viz, the interest charge, processing charge, and the insurance premium ( which includes the administrative charges in respect thereof). And NBFC-MFI cannot levy any charges part from these three mentioned above.
How can a borrower will come to now about the current interest rate being charges by NBFC-MFI?
RBI has made it mandatory for the NBFC-MFI to prominently display in all its offices and in the literature issued by it i their website.
Is there any pre-payment penalty that NBFC-MFI can levy?
No.
What is the minimum moratorium period applicable in case of NBFC-MFI?
There must be a moratorium period between the grant of the loan and due date of repayment of the first installment. The moratorium shall not be less than frequency of repayment.
Are the credit concentration norms applicable to NBFC-MFIs?
No, the credit concentration norms are not applicable here.
Are their any specific corporate governance guidelines applicable?
The Directions given in Non-Banking Financial companies - Corporate Governance ( Reserve Bank) Directions, 2015 issued vide notification number. DNBR.019/CGM - 2015 dated April 10, 2015 are applicable.
Is it essential for NBFC-MFI to be a member of the Self Regulatory organization (SRO)?
Membership to SRO is not mandatory. However, NBFC-MFI are encouraged to voluntarily become members of at least one SRO.
What is the total cost for Microfinance company registration charged by BIATConsultant ?
The total cost will be around Rs.8,00,000 out of which Rs. 5,00,000 will be the professional fees and rest will be the government fees. If you are thinking that professional fees are quite high, then you are wrong as it is a very complex and time-consuming process.
