Updated on July 06, 2024 11:52:02 PM
Section 8 Microfinance Company or Micro-finance Institution (MFI) is a financial organisation that provides credit to people and organisations who are denied access to traditional financial institutions due to poverty, occupation, ethnicity, religion, or nationality.
Incorporation of a Microfinance Company under Section 8 is the establishment of a non-profit microfinance organization in India under Section 8 of the Companies Act, 2013. These organizations play a crucial role in offering financial services to low-income persons and marginalized communities, to empower them economically. The microfinance company registration process will fully comply with the legal requirements and regulatory standards of the Ministry of Corporate Affairs (MCA) and other relevant authorities.
By providing crucial financial services, including microloans, savings, and insurance coverage, the Section 8 Microfinance Companies are major players in ensuring financial inclusion and improving the socio-economic status of the underserved population of India. To start a Microfinance Company requires careful planning strict adherence to legal and regulatory requirements, and a commitment to serving the financial needs of underserved communities with an agenda for social impact and sustainability should be at the core. It also enhances the credibility of the microfinance sector.
Section 8 Company Sample Documents
Note: As per the current guidelines, the Ministry of Corporate Affairs prohibits the incorporation of Section 8 Companies with the objective of engaging in Microfinance activities. This restriction extends to any attempts to amend the object clause of Section 8 Company( by way of passing a special resolution). For more information kindly check the attached Circular issued by MCA.
Section 8 Microfinance companies are financial organisations that provide finances to low-income groups. These companies are introduced to ease the credit system for small businesses as they don't get loan facilities from banks due to their complex process.
Therefore, it is also known as a Micro-credit or Micro-benefit organisation. Microfinance companies are the most convenient business to register that can provide unsecured loans without RBI approval at rates upto 26% p.a.
The compliances of section 8 company as a Microfinance business is same as normal with an addition of filing of MBP-1.
To form a company, you must apply for the digital signature certificate of the designated directors of the proposed company. All the documents for Section 8 companies are filed online, and e-forms must be digitally signed. So, the designated directors must obtain their DSCs from certifying agencies.
The next step is to apply for name approval. The name must suggest that it is registered as a Section 8 company. While making the name application of the company, the industrial activity code and object clause of the company have to be defined.
After the name approval, details concerning the company's registration have to be drafted in the SPICe+ form. It is a simplified proforma for incorporating a company electronically. The details in the form are as follows
SPICe e-MoA and e-AoA are the linked forms to be drafted when applying for company registration.
Post-approval of the documents from the Ministry of Corporate Affairs, PAN, TAN & Certificate of Incorporation will be issued from the concerned department.
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The total cost of registering a micro-credit/finance company under section 8 registration with professional Utiltites is Rs. 50,000 only all-inclusive.
All applicable taxes are included in the approximately that must be paid as part of the registration fee for a section 8 microfinance company.
Note: The aforementioned Fees is exclusive of GST.
Step 1:
Get in touch via call or contact form
Step 2:
Provide necessary documents
Step 3:
Get your incorporation registered in 10-14 days
Starting up your own Section 8 Microfinance company can be an extremely rewarding experience, allowing you to help people improve their lives through the small business loans you make available to them.
The registration process is extremely simple and hassle-free if you choose the right Business consultant to help you with it. However, it can also be quite daunting, as getting your Microfinance Company incorporated as a Section 8 Company isn’t always the easiest thing. Luckily, it does not have to be difficult if you follow the right steps.
At Professional Utilities, we leverage our industry knowledge and expertise to help businesses navigate complex regulations, minimize risks, and optimize operations for maximum efficiency and profitability.
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When you want to start a finance business across India without the approval of the RBI and without being restricted by capital amounts, the registration of microfinance companies under section 8 is the preferred choice among new businesses.
Microfinance businesses registered under section 8 can do micro-finance as per the guidelines within the set limit. A section-8 microfinance company can only provide a loan of a maximum of 1,25,000 rupees.
The total cost of registering a section 8 company with professional utilities is around Rs. 50,000 only.
You can register your micro-credit company under section-8 in India in 3 easy steps with professional Utilities.
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