The organization which is registered under companies act 2013 or 1956 and which facilitate financing activity such as loan, savings, and insurance to the needy people or to those who are incapable of getting a loan from banks and other financial institutions due to lack of proper facilities and documentations. We can say that these companies are a cluster of banking services to help meet the financial requirements of low-income people.
MFI is eligible to provide the loan or give credit up to 50,000 in the rural area and 1.25 lakh in the urban area to small businesses or to low-income people.
Non- Banking Finance Company (duly registered with RBI) and Section 8 company (no registration from RBI is required for this) are the two most ideal forms of business which can run as Micro Finance Institutions (MFIs)
Prerequisite and process of registration:
➲ Minimum net owned fund of 2 crores.
➲ Company should be registered under companies act 2013
➲ Obtain a certificate after making a fixed deposit in the named company
➲ Get all the certified copy and complete the other RBI formalities.
➲ File online application
➲ Submit the application to RBI physically
Pre-requisite and process of registration of MFI through section 8 companies:
➲ Company should be registered under companies act 2013, under section 8.
➲ Minimum two individuals who will act as the director of the company
➲ No net owned fund is required
➲ No RBI approval is required (The Reserve Bank of India through its master circular RBI/2015-16/15 DNBR (PD) CC.No.052/03.10.119/2015-16 Dated July 01 2015 has exempted all Sec 25 Companies engaged in microfinance activities.)
➲ Certificate of incorporation
➲ Certified copy of MOA stating financial activity as its main objective and AOA of company.
➲ PAN and ID proof of directors/promoters
➲ Address proof for the registered office of companies.
➲ Audit report of the company (if the company is already existing)
➲ Bankers report
➲ Other documents as perform of the company getting registered.