section 8 micro finance company registration process
Step-by-Step Guide to Registering a Microfinance Company in India
Introduction
Microfinance companies play a crucial role in providing financial services, such as credit, savings, and insurance, to individuals who lack access to traditional banking services. In India, where a significant portion of the population is unbanked, the demand for microfinance services is high. Establishing a microfinance company can be a rewarding opportunity for individuals looking to contribute to financial inclusion. This article will outline the registration process for starting a microfinance company in India, guiding you through essential steps and requirements.
Step 1: Choosing the Right Business Structure
Before initiating the registration process, it is vital to determine the appropriate legal structure for your microfinance company. In India, you can establish a microfinance company as a Non-Banking Financial Company (NBFC) or a Section 8 Company (under the Companies Act, 2013). While NBFCs operate under the regulatory framework of the Reserve Bank of India (RBI), Section 8 companies focus on charitable or social objectives, with restrictions on profits distribution.
Step 2: Meeting the Eligibility Criteria
To qualify for registration as an NBFC or a Section 8 company, specific eligibility criteria must be met. For an NBFC, the minimum net owned fund must be INR 2 crores ($2.7 million) as per RBI guidelines. Section 8 companies, on the other hand, require a minimum capital of INR 1 lakh ($1370) at the time of incorporation. Ensure that you comply with these financial requirements before proceeding further.
Step 3: Company Name and Registration
Choosing a unique and meaningful name for your microfinance company is essential. Conduct a thorough search on the Ministry of Corporate Affairs (MCA) official portal to ensure the availability of the preferred company name. Once finalized, apply for the name approval through the RUN (Reserve Unique Name) web service provided by the MCA.
Step 4: Obtaining Digital Signature Certificates (DSCs)
As part of the registration process, obtaining Digital Signature Certificates is mandatory. DSCs ensure the authenticity of documents filed electronically. Approach Certifying Authorities authorized by the Controller of Certifying Authorities (CCA) to apply for DSCs. Submit the necessary documents, including identity and address proofs, along with the application.
Step 5: Preparation of Incorporation Documents
For registering as an NBFC or a Section 8 company, several incorporation documents need to be prepared. These include Memorandum of Association (MoA), Articles of Association (AoA), declarations, affidavits, and other relevant forms. Engage the services of a qualified Company Secretary or a legal professional to draft and prepare these documents accurately.
Step 6: Filing the Incorporation Documents
After preparing the incorporation documents, they should be filed electronically with the Registrar of Companies (ROC) through the MCA portal. The application for incorporation, along with the prescribed fees, should be submitted within 20 days from the date of acquiring the name approval.
Step 7: Obtaining Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN)
Once the microfinance company is successfully incorporated, apply for PAN and TAN. PAN is a unique identification number issued by the Income Tax Department, whereas TAN is required for deducting and depositing taxes on behalf of employees.
Step 8: Registration with the RBI (for NBFCs only)
If you have chosen to establish your microfinance company as an NBFC, you must apply for registration with the RBI. Submit an application along with comprehensive details about the entity and its directors. Fulfill all the necessary requirements mentioned in the RBI’s guidelines for registering NBFCs. The RBI will carry out a meticulous verification process before granting registration.
Conclusion
As financial inclusion gains momentum in India, establishing a microfinance company provides a platform to support the underserved and contribute to the nation’s development. By following the step-by-step guide mentioned above, you can successfully navigate the company registration process, ensuring compliance with legal requirements. Remember to seek professional guidance whenever needed, and embark on your journey to create a positive impact through microfinance in India.,
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section 8 micro finance company registration process
This article is only published for informational purposes. Please consult your Chartered Accountant or Financial Advisor before making any important financial decisions.
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