Micro finance companies are financial organisations that finance low-income parties whose monetary requirements are lower than the other sectors. These services are extended to sectors that lack access to conventional financial institutions like banks. A micro finance company is registered under Non-Banking Finance Companies authorised by RBI or under Section 8 of the Companies Act 2013.
Micro Finance Company Registration
Micro Finance Company Registration in India
Micro Finance Company Registration fees in India at just Rs. 149000 (excluding taxes)
Features of Micro Finance Company Registration
More simple than it looks!
Support low-financed businesses
It empowers enterprises with low or no investments, helping them flourish without traditional collateral security. It also fosters a startup culture.
Women empowerment
Blooming women entrepreneurs receive financial assistance through microfinance companies, especially in rural areas. This plays a key role in poverty reduction and promoting gender equality in economic participation.
Tax benefits
Micro-finance companies registered under Section 8 enjoy income tax exemptions under 80G and 12A of the Income Tax Act. It can also leverage deductions and financial structuring to optimize tax liability.
Digital Transformation
This supports automation, reducing costs, and increasing reach as many microfinance companies move towards mobile applications, digital wallets, and AI-based credit scoring to disburse loans quickly.
Formalises Money Lending
Formal loan sources instil discipline among low-income groups, helping them avoid excessive borrowing and mounting future debts.
High-Profit Potential
Micro-finance company registration enables digital lending, fintech partnerships, and microloan structuring, reducing operational costs and increasing profits.
Eligible for Government and RBI schemes
The RBI supports microfinance initiatives through Priority Sector Lending (PSL) norms for banks and financial Inclusion Programs like the Jan Dhan Yojana.
Relaxed Regulations
If your microfinance company is registered as a Section 8, you can lend without RBI approval. No minimum capital is required for the registration, allowing NGOs and social entrepreneurs to enter the sector.
Low Competition
Rural and semi-urban areas have fewer financial institutions, leading to a high demand for microloans. Registered companies enjoy higher market penetration than banks in underserved regions, as they offer collateral-free loans.
Micro Finance Company Registration
Section 8 Micro Finance Company Registration in India involves multiple steps, as it is a non-profit
entity regulated under the Companies Act 2013.
Step 1: Business Plan
Firstly, you must prepare a detailed business plan for your microfinance company,
including
the scope of financial services and the target audience. It should also mandatorily
depict
expected funding sources and Compliance with RBI and Section 8 Company norms.
Step 2: Obtain a DSC and DIN
In the online microfinance company registration, all directors must obtain a DSC from a
government-approved agency like eMudhra, Sify, or NSDL. You can apply for a DIN from the
Ministry of Corporate Affairs through Form DIR-3.
Step 3: Reservation of Name
Apply for name approval via the MCA portal's RUN service.
Step 4: Draft Memorandum & Articles of Association
The Memorandum of Association should define microfinance as the company's primary
objective,
and the Articles of Association should outline the rules and regulations of the company.
Step 5: Apply for Section 8 License
Submit Form INC-12 to MCA for the Section 8 License, MOA, and AOA. Along with
declarations
in Form INC-14 and 15 with estimated future income and expenditure statements.
Step 6: Register Your Company
Once the Section 8 License is approved, you can apply for company incorporation via
SPICe+
(Form INC-32) on the MCA portal. After approval, the MCA issues the Certificate of
Incorporation.
Documents Required for Microfinance Company Registration in India
Micro Finance Company Registration process in India under Section 8 Microfinance Company (Non-Profit) requires several identity and address proofs along with other documents. It does not require RBI approval but needs approval from the Ministry of Corporate Affairs.
- PAN card of all directors
- Aadhar card of all directors
- Passport-size photographs
- Address proof (Electricity bill, Water bill, Gas bill), any one
- Proposed name of the company
- Mobile Number and Email ID
Types of Micro Finance Companies in India
- Section 8 microfinance company
- NBFC microfinance company
FAQ's
Few doubts important to be resolved quickly
