Microfinance Company
Formation (Section 8)
Microfinance Companies may be incorporate under Section 8 of the Companies Act, 2013 subject to not requiring RBI approval for microfinance activities in India. We advise and assist in setting up the Microfinance Company formation anywhere in India.
Section 8 Microfinance Company
A Section 8 Company can engage in activities related to microfinance, such as providing microloans, financial literacy programs, and other services aimed at uplifting economically disadvantaged sections of society. Microfinance has gained recognition as a valuable tool for poverty reduction and economic development, and it continues to evolve with innovations in financial technology and sustainable business models. Various organizations, including microfinance institutions, non-governmental organizations (NGOs), and social enterprises, contribute to the implementation and success of microfinance initiatives around the world.
Conditions of Micro Finance Company (Section-8)
- Approval of RBI is not required
- Minimum 2 persons required as Directors/Shareholders.
- No minimum capital or not owned fund requirement, however, suggested a minimum capital of Rs. 1,00,000.
- Only Unsecured Loans can be provided.
- Interest can’t be charged higher than the allowed limit.
- Basic documents required only.
Section 8 Microfinance Company Benefits
No need for RBI approval
RBI guidelines specifically follow rules and regulations to form NBFC (Micro Finance Company) but Section-8 Microfinance Company can start without the approval of RBI.
Loans up to a Specific Limit
A Microfinance Company is allowed to provide unsecured loans to small businesses or groups of persons up to Rs. 50,000 and Rs. 1,25,000 to Dwelling Residence.
Requirement of Net Owned Funds
Other financial Companies like Nidhi Company or NBFCs need to have a certain amount of Net Owned capital before starting their business, but there is no such condition of certain amount for a Microfinance Company as like section-8 company.
Minimum Member
If you start a finance business with Nidhi company you need 7 members but, In the case of Section 8 Microfinance Company can be done with a minimum of 2 members as shareholders
Perpetual Succession
Section 8 Microfinance Company incorporated with rules and notification prescribed by the Companies Act, 2013.
Separate Legal Entity
A Section 8 Microfinance company has a separate legal entity distinct from its shareholders. This means the Company is responsible for the management of its assets and liabilities, debtors, creditors, etc. Hence the shareholders are not responsible for it.
Get in Touch
Documents required
- PAN Card or Passport (Foreign Nationals & NRIs)
- Copy of Aadhaar Card/ Voter’s ID/ Passport/ Driving License
- Passport-sized Photograh
- Mobile Number and Email Ids of all parties.
- Latest bank statement (2 months)/ telephone or mobile bill/ electricity or gas bill
- Electricity Bill for Registered Office.
Frequently Asked Questions
Company formation in India is a straight forward, online process. It involves submitting the SPICe+ form to the Registrar of Companies (ROC). we ensure accurate completion and filing of the SPICe+ form along with the required documentation. So, for a seamless end-to-end company registration process in India, hire us as your Company Registration consultant.
The most important benefit of Section 8 Microfinance Company Formation online is its quick, online, and efficient process. It drastically reduces paperwork, time overruns, and allows real-time tracking of the application status.