Micro Finance Company Registration

We, at JR Compliance, guarantees to invest our sustain efforts in completing the Micro Finance Company registration to make registration process unchallenging for our clients.

Contact our experts to know how to start micro finance company.

What is a Micro Finance Company?

Microfinance companies provide banking services to the unemployed or low-income people/individuals who do not have access to financial services.

India’s experience in the case of microfinance differs depending on two aspects. First, India engages its public bank sector to provide microfinance networks. Moreover, India’s experiment in microfinance has been described by NABARD as a banking relationship instead of parallel banking in the other parts of the world.

Secondly, the thrift first and not credit first was examined as the base for microfinance in India. In India, SHGs (Self-help groups) were encouraged to save within the group, manage their finances, and provide loans internally. Further, to deposit their saving in the bank to ensure easy access to the banking network and lastly, to negotiate with the bank for credit. 

Moreover, as of December 2020, scheduled commercial banks hold 42% of the market share of loans within the microfinance industry, which was increased by 2% since December 2019. On the contrary, non-banking financial companies hold 32% of the market share, 17% earlier. 

Get Free Expert Consultation!

Your Name*
Phone*
Your Message
Please fill all the required fields!
Please accept terms and conditions to proceed

Benefits of Micro Finance Company Registration

To ensure that staff and individuals act on behalf of oriented and trained to PU the code of practice, MFIs should maintain transparent and professional governance. Thus, educating the clients regarding the code of conduct and its implementation.

Consequently, it will assist in maintaining the dignity of the employees and clients.

MFI ensures fair practices as it provides financial services to the clients only if it is eligible as per the RBI guidelines. 

For this, according to standard KYC norms, MFI should procure the replica of appropriate documents. 

Moreover, it also helps avoid over-indebtedness through due diligence according to their internal credit policy to understand the need and repayment capacity of the client before lending the loan.

It also ensures the finest interaction between clients and MFI representatives. It directs the representative to use the most appropriate language, maintain decorum, prevent MFI representatives from contacting clients at odd hours, etc. Further, it maintains the privacy of the clients.

To rectify the error or handle or receive client’s complaints immediately, MFIs have a feedback and grievances mechanism. However, establishing a feedback and grievance mechanism is not enough. The MFI must inform the client about the same along with the procedure to access the service. 

As per RBI fair practice code, the terms and conditions of the service must be disclosed before the disbursement. It could be revealed in any of the below-mentioned ways,

  • Loan card
  • Individual sanctioned letter
  • Passbook
  • Loan Schedule

To be noted, an MFI needs to educate the clients concerning all the terms and conditions in regional language or language understandable by the client. The fundamental objective of doing so is to maintain transparency regarding interest rates and payables fees. 

Moreover, MFI also maintains the written record of charges levied for every financial service.

Micro Finance Company Types

In India, microfinance institutions are registered under any of the below-mentioned entities,

Non-government organizations involved in microfinance (NGO-MFIs), including Trust and society.

For-Profit NBFC.

Cooperatives registered under Conventional State-level Cooperative Acts, New State-level Mutually Aided Cooperative Acts (MACS Act), or National level Multi-State Cooperative Legislation Act (MSCA 2002).

NBFC-MFI.

Section 25 Companies (Not-for-Profit).

NBFC Micro finance company

We at JR Compliance will invest our efforts in providing you complete assistance in how to start micro finance company. Moreover, we believe in providing reliable and adaptable services to our customers to provide satisfactory Micro Finance Company registration services. 

How to Start Micro Finance Company?

As mentioned, Micro finance company need to be register under different entities, below-mentioned are the Micro Finance Company registration processes.

Registration of Society Under Society Registration Act, 1860

Below-mentioned is the process of Micro finance company registration under Society Registration Act,

  • The application will be submitted to the assistant registrar of the region or sub-region as the location of the society. 
  • Along with the application affix, Memorandum of association (MOA), Consent letters from all the managing committee members, All the managing committee members must sign the authority letter, etc. 
  • After submitting the documents, registration fees will be paid.

Note- Unlike the Trust deed, the MOA and rules and regulations must not be executed on the stamp. Moreover, society registration is time-consuming as compared to trust registration.

Registration of Cooperative Society

Given below is the micro finance company registration process as a Cooperative Society,

  • The registration application to the Registrar of Cooperative Societies will be duly filled.
  • The four replicas of society’s proposed by-laws needs to be affixed.
  • If all the applicants are individual, the number of applicants must not be below 10.
  • In case the applicants are individuals, every applicant must sign the application.  
Registration of Multi-State Cooperative Society
  • The registration application must be signed by,
    1. In the Multi-State Cooperative Society case, which includes all the individuals’ members, a minimum of 50 individuals from each state are concerned. 
    2. In the case, members are Cooperative Societies, through a duly authorized representative on behalf of a minimum of five such societies as are unregistered in the same State. 
    3. Other Multi-State Cooperative Society or other Cooperative Societies, by duly authorized representatives of each society.
  • Along with the application, the four replicas of the proposed by-laws will be affixed.
  • Along with this, information regarding Name of the proposed Multi-State Cooperative Society, Area of operation, Headquarters, Fundamental objective, and more.
Registration of Not-for-Profit Companies Under Section 25 of Companies Act
  • Before filling the registration application, it will be checked whether the company name is available or not. For this, Form A needs to be submitted.
  • After name approval, an individual application to the regional director of the Company Law Board will be filed.
  • Affix the below-mentioned documents,
    1. Each promoter correctly signed the replica of MOA and AOA, including their name, address, and occupation.
    2. An advocate/chartered accountant declared that MOA and AOA had been formed in conformity with the Act’s provisions compiling all the Act’s requirements.
    3. Photocopy of promoters, including their name, address, and occupations. Also, provide the information regarding other companies in which directors and promoters hold positions.
    4. A statement indicating the information concerning assets and liabilities of the establishment/association, as on the date of a registration application or within seven days of that specified date.
    5. Information regarding estimated financial annual income and expenditure of the company, mentioning the source of income and objective of expenses. 
    6. If any, provide the statement of prior work done by the association and the proposed work to be done after registration.
    7. A statement including information regarding the base on which application is made.
    8. A declaration declaring that each individual creating the registration application is sound, not guilty of any offense in court, and is not disqualified under Companies Act 1956, Section 203.
  • Further, within a week of applying, a notice in a minimum of one fundamental language of the district and at least in an English newspaper of the district needs to be pubished.
  • At least, if within 30 days of the notice publication, no objection is raised, and after consultation with the authority license will be provided to you if you withstand the rules and regulations. 
Registration of NBFC-MFIs

Searching for how to start micro finance company? Check the below-mentioned steps,

  • If an existing NBFC wants to convert into the NBFC-MFIs, registrationn will be done instantly to the regional office of the registered office location. 
  • The NBFC to NBFC-MFI will be incorporated in the COR.
Registration of NIDHI Company

Section 620 (Under Companies Act, 2013 Section 406) enables establishing the new form of a particular type of company, i.e., “Mutual Benefit Society.”

However, particular provisions under the Companies Act have been modified concerning this section. Consequently, conditions of document’s service, additional capital, dividends, annual returns, loans, remunerations to directors, and winding up process have been changed for the Mutual Benefit Society or NIDHI company. 

Registration of Public Trust

Below-mention are the steps of how to start micro finance company,

  • Application will be made to deputy or assistant charity commissioner.
  • The public trust designation information, including trustees’ names, mode of succession, etc needs to be provided.
  • Further, the court fee stamp (Rs 2) needs to be attached to the application form and the registration fees will be paid.
  • The application form signed by applicant needs to be submitted before the regional officer or superintendent of regional offices or a notary. 
  • The registration application will be submitted affixing the replica of a trust deed. 
  • If an applicant commences trust with Rs 1,000, the trust deed should be executed on the non-judicial stamp paper. 
  • The settlor (s) and trustee (s) will sign the trust deed, preferably before the notary. 
  • An applicant require to submit the an affidavit and letter of consent.
  • After submitting documents, a formal hearing will be dispatched concerning which you will receive a notice 10-15 prior. 
  • Generally, an applicant must appear individually or with a deputy representative comprising the original trust deed for verification. 
  • After inquiries, the deputy or assistant charity will enter Section I or Schedule I of the Bombay Public Trust Act.
  • Finally, the certificate will be issued to you.

Our Role in Obtaining Micro Finance Company Registration

JR Compliance will assist you in the process of Micro Finance Company registration from the first to the last step. 

Our MFI experts will assist you in the process of documentation. 

We will educate you regarding how to start micro finance company, to make you understand every aspect of the micro finance company registration process.

We will directly coordinate with officials to ensure appropriate follow-ups and acknowledgments.

Our consultants comprise knowledge of each type of microfinance company registration in India.

Our Micro Finance Company registration consultants guarantee to provide you with the most appropriate solution for any of your concerns. 

Micro finance company registration

Conclusion

Obtaining a Micro Finance Company registration certificate could be confusing because it includes various types of registration, which involve many other processes. Moreover, the different registration process requires additional documentation and other criteria which an establishment needs to fulfill along with proper understanding of how to start micro finance company?

Thus, you require experienced and professional personnel to assist you in completing the registration process. JR Compliance with the experience of over 8+ years guarantees to provide exemplary service while ensuring convenience and need of our clients. 

Hence, for expert and professional services, contact us immediately.

Have Questions? We've got answers.

What is the difference between a bank and microfinance?

Banks provide their banking services to individuals who possess an account in a specific bank. However, a microfinance company usually provides banking services to rural households, low-income individuals/groups.

What is the complete form of NBFC-MFIs?

NBFC-MFIs stands for the Non-banking Financial Company- Micro Finance Institutions. 

Can NBFC-MFIs lend money for personal use or emergencies?

A part of aggregate amount loans, i.e., might extend for the objective of housing repairs, medical, educational, and other use or emergencies. But, on the contrary, the aggregate loan amount provided to a borrower for income generation must constitute 50% of the total loan from NBFC-MFIs.

What are the limits or restrictions imposed on NBFC which do not qualify the NBFC-MFIs?

As per the loan meeting “Qualifying Assets” criteria, such NBFC must not have above 10% of its total assets like loans.

Can NBFC-MFIs charge different interest rates from other customers?

Indeed, an NBFC-MFI charges different interests from different customers; however, the minimum or maximum interest rate difference must not exceed 4%.

How can a customer discover the current interest charged by NBFC-MFIs?

As per the Reserve Bank of India (RBI) guidelines, every NBFC-MFIs must display its current interest rate in offices, issued literature, and its website.

What are the capital adequacy requirements for NBFC-MFIs?

Every NBFC-MFIs must maintain the capital adequacy of ration comprising Tier I and Tier II capital must not be below 15%of its aggregated risk-weighted assets. Moreover, the total of Tier II capital should not necessarily exceed 100% of Tier I capital.

Are credit concentration norms applicable to NBFC-MFI?

No, credit concentration norms do not apply to the NBFC-MFIs.

Is it mandatory for an NBFC-MFI to be a member of a Self-Regulatory Organization (SRO)?

No, an NBFC-MFI does not necessarily have to become a member of SRO. But, on the other hand, it is advised to be a member of at least an SRO.

Disclaimer:

All to whom it may concern, JR Compliance is not liable for any direct, indirect, incidental, special, or consequential damages from the use of any information contained on our website, or from any action/ decision taken as a result of using the site.

The information provided on this website is with the sole intention to give information, not a professional opinion. Moreover, our website might include copyrighted material that may or may not have been specifically authorized by the owner, however, used for the purpose of providing information. That constitutes a “fair means” under Section 52 of the Copyright Act, 1957.

Customer Support: 1800121410410
Phone:

+91 1143022315

Email:

info@jrcompliance.com

support@jrcompliance.com

Address:

K8, Sector 3, Bawana Industrial Area, Delhi - 110034 (India)

Intellectual Property -  Unless otherwise stipulated, this site is our proprietary intellectual property. All the graphics, media, editorial content, and website design (altogether, “content”) used are the intellectual property of JR Compliance which are protected by Trademark, Copyright, and other applicable intellectual property laws. 

Any content or mark might be copied, reproduced, republished, and displayed publicly for any profit-oriented purpose whatsoever, require our prior written permission, otherwise, an offender may have to face legal consequences. 

Get Your Free Consultation!

Ask any questions you have. Our Experts would love to help you.

Full Name*
Phone no.*
Your message*
Please fill all the required fields!
Please accept terms and conditions to proceed
Please wait