Microfinance Company Registration in India- GSB Taxation

What is a Microfinance Company?

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 companies are regulated under RBI Act of 1934.

Microfinance Company Registration Procedure

To register a microfinance company, applicant has to follow a predefined procedure as per the guidelines of RBI Act 1934. Here is the stepwise guide or procedure for microfinance company registration.

Apply for Company Incorporation - It is first step required MFC registration because only Pvt Ltd Company or Public Limited Company with paid up capital of at least 1 lakh INR can apply for microfinance company registration.

Raise Paid Up Capital of Company - Equity share capital of the company must be raised up to 2 crores or 5 crores as per the case.

Bank Account Opening Procedure - After raise in authorized capital, a bank account in name of company is opened in which this amount is deposited. Bank issues a certificate.

RBI Approval Application - Next step is to file RBI approval application for Micro Finance Company registration. You need to file online application along with required documents.

Hard Copy Submission - After online application submission, a hard copy of the registration application is submitted in regional RBI office.

Issue of COC for Business - After conduct of diligence and complete satisfaction, A certificate of commencement of business is issued to the applicant entity.

Documents Required for Microfinance Company Registration

Before applying for Microfinance Company registration, the applicant must go through document preparation to avoid any chance of cancellation of the application due to shortage of correct documents.

Duly certified COI and COC of the company
Certified copy of MOA, AOA of the company
Board resolution document to certify that the company will follow norms specified in RBI Act, 1934
Financial details of investments and holdings of the company
Audit report with financial balance sheet
Certified copies of highest educational qualification of all directors

Documents Required for RBI application to Register MFC

You are required to apply for RBI approval to commence operations of the micro finance company in India. Below is the list of documents required for RBI application to register micro finance company.

Certified copy of COC and COI
Certified Copy of MOA and AOA of business
Copy of FD receipt
Bank certificate for net owned funds
Audit report with financial balance sheet