How to Start a Micro-Finance company in India




How to Start a Micro-Finance company in India

Micor-Finance Company in India:

Microfinance companies usually provide loans to the economically weaker sections. It is directly related to small business or small segment business. The Microfinance sector has received a boost over the years. It has emerged as a kind of market through which the needs of common people are also being met. In this article, Microfinance companies or institutions are being explained in detail. The procedure for opening the company and the registration rules will also be explained.

What are micro-finance institutions?

Micro-finance companies are registered under the Companies Act 1956. The Reserve Bank of India (RBI) generally gives Microfinance Institutions status to companies with total assets of less than Rs 5 crore. The purpose of registering such companies is to financially support the economically weaker or lower Aryans. That is to arrange a loan for them so that they can use this money to set up their business.

Benefits of the Micro-finance Company

  • Micro-finance companies provide funds in the form of loans to the common people for setting up a cottage or small-scale industry.
  • Also provides training to start a business. For this, large-scale training camps are organized in different parts of the country.
  • Banks also provide information related to how benefits can be availed through financial institutions like insurance.
  • Micro-finance companies have an important role in creating employment opportunities for economically weaker people.

Also Read:- How One Entrepreneur Escaped a Cult and Built a 7-Figure Business

Process of Microfinance Company

Microfinance companies in India are generally operated through two systems.

(1) Self Help Groups (SBLP)

(2) Microfinance Institutions (MAPIS), Self Help Groups i.e. Bank Village Program, which is a bank-led microfinance system.

This system was introduced in 1992 by NABARD. It works for the village in general. 10-15 women of the village are prepared as a group and a loan is arranged for them. Whereas, the Microfinance institutions usually provide loan facilities to both urban and rural residents.

No more than one lakh rupees loan under microfinance

Financial institutions are reluctant to give more money in the form of loans under microfinance. He has made a rule for this, under which customers will usually not be given more than one lakh rupees in the form of loans. Not only this, a borrower will not get the benefit of a loan from more than three companies or financial institutions. Microfinance institutions have issued a new code for this, which is being implemented for the entire micro-industry. Institutions argue that this decision has been taken from the perspective of security. Due to this decision, loans can now be provided to a large number of people.

Also Read:- 7 Top web based business Trends to Watch in 2020

How to start a company in India with MCA?

  • To open any kind of company, first of all, it has to be named. After this, a PAN card can be made in the name of the company.
  • The company may have at least 2 and not more than 15 employees. To become a director of a company, a person must be 18 or over.
  • An office will be required for the company. The office should be in a place where communication is better. Internet works smoothly.
  • Company capital can be understood as government fees. That is, during registration, the government fees will have to be paid, which is different.
  • No educational qualification is required to open a company. Any person can open his company after fulfilling the government regulations.

Documents required by the company

  • Aadhar Card
  • Pan-card
  • Bank account
  • Address proof
  • NOC
  • Electricity- bill
  • Rent agreement paper
  • Mobile -number
  • Email ID

Company registration process

Form INC-29 has to be filled for company registration in India. After entering all the necessary information on the form, he has to be attached with the documents. The form will be sent to the Ministry of Corporate Affairs. If a company is already running with the name of the company registered on the form, then the operator will have to change the name of their company. The Ministry does not register two companies under one name. For registration, you can visit the official website of the Ministry of Corporate Affairs. The Company registration process may take 15 to 20 days.



Author Biography.

Ravi Kumar
Ravi Kumar

Content Writer

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