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A Micro finance institution can be set up as an NBFC. There are certain requirements that should be met for setting up of the MFIs as NBFC. There are certain documents also that should be filed. In this article, we shall discuss the complete process of setting up of an MFI as NBFC.
As per NABARD, microfinance means provision of thrift, credit and other financial services and products of small amount to the poor in the rural, semi-urban and urban areas given to the customers to meet their financial needs. The qualification for the same is that transactions value is small and customers are poor.
Whereas a micro finance institution refers to an organization that provides financial services to low-income people and offer loans to their members and many provide insurance, deposit and other services. Therefore the organizations that finance on a large scale are called microfinance institutes. They provide credits and other financial services to the representatives of poor strata of the population.
The following list of documents should be filed with the Reserve bank:
An MFI can be registered as an NBFC in the following way:
It is worth mentioning here that the process provided here is detailed according to the same provided under the RBI Act and its rules that govern the MFIs. Therefore readers must visit the official website or Act to remain updated with all the formalities and information about incorporation of MFIs.
A Micro finance institution can be set up as an NBFC. The requirements provided above should be met for setting up of MFI as NBFC. In case of any query, you should take the assistance of a professional in this regard.
Read our article: Role of MFIs in Rural and Small-Scale Sector
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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