MICRO FINANCE REGISTRATION
INTRODUCTION:
Micro finance also known as Microcredit. It is a company that provides small owners and entrepreneurs access to capital. Also, these small and individual businesses do not have access to traditional financial resources from major institutions, so it is difficult for them to access loans, insurance, and investments that will help them grow their business.
It is an attempt to provide basic financial services like loans, opening savings accounts, and other services for people with low income. Understanding the basic concepts of microfinance can help you easily access financial assistance.
It helps to provide for unemployed or low-income individuals because most people are trapped in poverty and do not have enough income to do business with traditional financial institutions.
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TYPES OF MICRO-FINANCES:
Micro credit: Microcredit is part of the big microfinance industry which especially focuses on providing for individuals having a low income.
Micro loans: Micro loans are short-term loans in a small amount that provides microfinancing to individuals.
Micro insurance: Micro-finance targets individuals in the informal sector with low-income people.
Micro saving: It is a type of saving in which small that allows businesses to save money in smaller amounts or increments.
Why is Micro-Finance Registration Necessary?
Registration of micro-finance companies under section 8 is a good option if you want to start a financial business across India without any RBI approval and capital restriction. It helps poor people to reduce poverty. And these kinds of businesses are exempted from getting licenses from RBI.
BENEFITS OF MICRO-FINANCE REGISTRATION:
Repayment-Free Loans: Most of the microfinance companies in India provide financial credit with no collateral.
Quick Loans under Urgency: It provides collateral-free and provide funds to an individual in demanding conditions to meet their financial needs.
Provide Financial Needs: The micro-finance helps an unemployed individual and a poor individual by providing them with easy financial loans.
Portfolio of Loans: In India, most microfinance companies are not only limited to providing emergency loans but also distribute loans, working capital loans, and housing loans with minimum processing fees and other formalities.
Self-sufficiency and Entrepreneurship: It offers much-needed funds to an individual for establishing a business that needs low investment etc. and these companies ensure entrepreneurship and self-sufficiency among the lower income group.
Create Jobs: It creates new job opportunities for others.
Future Investments: It interrupts the poverty cycle by making more money like basic requirements are met, and families can invest in better health care, business, and other small business opportunities.
LAW RELATED TO MICROFINANCE REGISTRATION:
Section 8 Microfinance company has to be registered under the provisions of the Companies Act, 2013.
FOLLOWING ARE THE PROGRAMS AND SERVICES THAT MICRO-NGOs UNDERTAKE:
Agricultural microfinance
Housing microfinance
Micro finance in partnership with authorized micro insurance companies, agents or entities.
Money transfer and other related remittance services, in partnership with authorized agents and/or entities
MAIN FEATURES OF SECTION-8 MICROFINANCE COMPANY:
RBI approval is not required.
Minimum Compliances.
Can give unsecured loans to small businesses (rural) of Rs. 50,000.
Can give loan for dwelling residence (urban) up to Rs.1.25 lakhs.
Section-8 Micro-Finance companies have to follow the RBI guidelines on the interest rate and processing charges.
It is a legal finance business and you can sue the defaulter in case of non-payment of the loan amount.:
DOCUMENTS/DETAILS REQUIRED FOR REGISTRATION OF SECTION 8 MICRO-FINANCE COMPANY:
Duly filled application form with passport-sized photographs of all directors
KYC of directors and shareholders (Passport, Voter’s ID card, Driving License, Aadhar card
Business Incorporation Certificate
Income proof of directors and shareholders along with their PAN cards
Business address proof or rental agreement
NOC from the owner Money transfer and other related remittance services, in partnership with authorized agents and/or entities
Applicable stamp duty (As per state)
Any other documents required by the respective authority
CONCLUSION:
The micro-finance company registration is a hassle-free and simple process. The purpose of this type of entity is to take initiatives to serve the low group income of the group of the society.
