To critically analyze the above, it is essential to know the regulatory requirements for FDI, m...
Microfinance company provides financial support to entrepreneur and small businesses. Micro Finance company is part of Non-Banking Financial Company who provides credit finance to individual and small business. It is also known as Micro Finance Institute (MFI)
There are two categories of business form handled by Micro Finance activities
Minimum net owned funds for incorporating NBFC-MFI (other than section 8 company) is 5 crores. While in the northeastern region of the country, it will be 2 crores.
Every finance businesses have to be authorized by Non-Banking Finance Company and governed by RBI. All NBFC has to get registered with RBI and comply with the guidelines. However, there are certain business models which are exempted given by RBI to perform financial activity to certain extent
MFIs are always fair and keep their policy clear to have better transparency with their customers. Customers are not required to keep any security deposit or collateral for getting a loan from MFIs. Following points should be kept in mind while taking loans:
The profit earned by the company or any other income received shall be solely utilized for the promotion of the company as per the clause of the memorandum.
A person who at any time, has been a member of the company or to any one person claiming through shall not be given any portion of profits or other income earned by the company.
A person is not entitled to get remuneration or any other benefit in money or money’s worth, except payment made out of pocket, interest on money lent, rent on premises let to the company
However, company in good faith shall make payment to any of its officers or any other person who is not a member in return for their services
A Director shall get remuneration when he is engaged in the profitable organization. But shall not get remuneration when it is a nonprofit organization.