Microfinance Company Registration

---

What is a Microfinance Company Registration?

---

The majority of the current population of India lives in rural areas. The data distributed recently suggests that agricultural and other related activities still employ a majority of the population of the Indian Sub-continent. Hence, we see that there is a need of credit in rural areas which should be met for the sectors to grow and develop. This arose the need of an institution which could provide credit to these sectors and that too at a low rate of interest because the population which generally takes credit from these institutions is generally poor. Thus, they need credit which is cheap and does not increase their input cost.

And hence, Micro-Finance institution came into existence, which paved the way for the development of the small-scale sectors. the gap between the demand and supply of funds was reducing and the sector started to grow. The Micro-Finance institution provided cheap credit and also very low financing cost. Since, then the growth of this sector has been unstoppable and has been on continuous rise. The sector has nearly uprooted all the small-scale financers. And is currently serving the majority of the small-sectors in the Indian subcontinent.

Moreover, we see that in the recent years even though the growth in credit sector was down, the Micro-finance institution registered an enormous growth of 39 % and that too on a year-on-year basis. This so far has been a tremendous accomplishment for the Micro-Finance Institution.

The Micro-Finance Institution brought a revolution in the lending sector of the small-scale industries. The revolution has not ended, it has just only begun. The Micro-Finance Institutions have also exploring other sectors too, they have invested in the IPOs (Initial Public Offering), acting as the underwriters and other services too.

We must note that even though the Micro-Finance Institutions have grown and have several advantages, there are at the same time many disadvantages too. The sector recently has taken the burnt of too many NPAs (Non-Performing Assets) falling into its lap. This issue must be addressed because it is also plaguing the banking sector too.

Thus, we see after all the advantages and disadvantages, what Micro-Finance Institutions need is some revival.

A Microfinance Company or institution is a type of NBFC which is not authorized to take deposits but carry out small lending activities to finance the low-income category individuals like small businessman, farmers, agriculturalist, horticulturist etc. Microfinance registration are regulated under the RBI Act of 1934 in India.