Address : Casaheb,
- B-4 Spaze It Park, Sohna Road, Gurgaon, Haryana, 122018
- Phone +91-9717076556
- anup@casaheb.in
Microfinance Company Registration in India
- Regulatory Compliance
- Operational Risks
- Interest Rate Regulations
- Capital Adequacy
Key Features of Microfinance Companies
1
Target Audience:
Microfinance companies primarily serve economically
disadvantaged sections of society, including rural and
semi-urban populations.
2
Loan Products:
They offer small-ticket loans, often without collateral,
to support income-generating activities,
entrepreneurship, and self-employment.
3
Regulatory Framework:
In India, microfinance companies operate under the
regulatory purview of the Reserve Bank of India (RBI)
and must comply with specific guidelines and norms.
Understanding Microfinance Company Registration in India
Microfinance companies play a pivotal role in India's
financial ecosystem by providing financial services to
underserved and low-income populations. These institutions
offer small loans, savings, and other financial products to
individuals who lack access to traditional banking services,
thereby promoting financial inclusion and economic
development.
Benefits of Registering a Microfinance Company
- Financial Inclusion: Facilitates access to credit for individuals excluded from the formal banking sector, empowering them economically.
- Social Impact: Contributes to poverty alleviation and community development by enabling small businesses and entrepreneurial ventures.
- Profitability: Despite their social mission, microfinance companies can achieve sustainable profitability through interest income and service fees.
- Non-Banking Financial Company-Microfinance Institution (NBFC-MFI): Registered under the Companies Act, 2013, and regulated by the RBI, these entities have specific criteria regarding net owned funds, qualifying assets, and income generation.
- Section 8 Companies: Non-profit entities formed with the objective of promoting social welfare, including microfinance activities.
Registration Process for an NBFC-MFI
Incorporation
Register the company under the Companies Act, 2013, with a
minimum net owned fund of ₹5 crore (₹2 crore for the North
Eastern region).
Application to RBI
Submit an online application through the RBI's COSMOS
portal, followed by a physical submission of the application
and requisite documents to the regional RBI office.
RBI Approval
The RBI reviews the application, conducts due diligence,
and, upon satisfaction, grants the Certificate of
Registration (CoR) to commence microfinance operations.
Capital Adequacy
Maintain a minimum capital adequacy ratio as prescribed by
the RBI.
Asset Classification and Provisioning
Classify assets and make provisions for non-performing
assets in accordance with RBI guidelines.
Interest Rate Regulations
Adhere to the interest rate caps and margin requirements set
by the RBI for microfinance loans.
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