MICROFINANCE REGISTRATION
Microfinance is a banking service provided to unemployed or low- income individuals or groups who otherwise would have no other access to financial services. Microfinance allows people to take on reasonable small business loans safely, and in a manner that is consistent with ethical lending practices.
Microfinance Company can be registered under RBI or can be registered as section 8 company.
Microfinance Company as section 8 company (without RBI approval)
- No approval from RBI is required.
- Can give unsecured loan to small business up to Rs. 50,000/ –
- Can give loan for dwelling residence up to Rs. 1.25 lakhs.
- No minimum net owned fund requirement.
- Interest rate must not exceed 26%.
- Processing charge should not be more than 1% of the gross loan amount.
- No extra charge over the actual cost of group, life, health, etc., can be charged.
- Governed as per Companies act, 2013.
Documents Required
- Detailed project report.
- PAN CARD of all directors and shareholders.
- Passport size photograph of all directors and shareholders.
- ID proof: Aadhar/ Voter Identity card/ passport of all shareholders and directors.
- Rent agreement in case of rented property.
- Address Proof: Utility bill, bank statement, telephone bill of shareholders and directors.
- Registered Office proof: Utility bill, bank statement, telephone bill of the registered office address.
- NOC from the owner of the registered office.
- Income tax returns of the promoters.
Microfinance Company Registered under RBI
- It can provide loan to those having annual income less than Rs. 1 lakh in rural areas and up to Rs. 1,60,000 in semi-urban areas.
- The first cycle of loan shall be Rs. 60,000/- and subsequent borrowing can be Rs.1 lakh.
- To register with RBI, the company should have a minimum net owned fund of Rs. 5 crores and Rs 2 crores if the registration is to be done in North Eastern states.
- The company cannot accept security deposits.
- One of the director of the company should have a minimum experience of 10 years in the financial sector.
- It should have a CIBIL membership and Credit Information Companies membership.
- It has to be a member of one of the self-regulatory organisations in the country.
Documents Required
- Certificate of incorporation of the entity.
- Memorandum of Association and Articles of Association.
- Educational qualification of the director.
- PAN, AADHAR and other KYC details of the director.
- Income proof of the director.
- Certificate or proof of work experience in the financial sector.
- Net worth certificate of the director.
- Latest credit report of the directors.
- Banker’s report about the company.
- Banker’s certificate indicating that there is no lien on the account balance of the Net Owned Fund.
- Detailed Action plan about the products and risk assessment policy.
- Organization’s structural plan.