Microcredit has been explained as the provision of thrift, credit and other financial services...
A finance company which provides the finances to lower-income groups is known as a Micro finance company. The financial requirements are less as compared to the other groups of society. These sectors do not have access to the traditional financial institution like banks and other financial institutions. In this article, we are explaining the complete procedure of Microfinance Registration.
It can be said that these financial institutions provide loans of smaller amounts. They provide small scale financial services in the form of a loan, credit of savings.
a. Company Registration
The critical part of the formation of Microfinance Company Registration is that it must be registered either as public or private limited Company.
For the private Company, there must be at least two members. For a public company of microfinance registration, there must be at least seven members.
The minimum capital requirement or minimum net owned funds required is 5 Crore Rupees.
c. No-Lien Certificate
Deposit the capital in the Bank once obtained. Apply for the No-Lien Certificate for the same.
d. License Application
The license must be filled through online application along with the certified documents must be submitted.
The list of documents that are required and needs to be submitted with this are:
a. DSC-Digital Signature Certificate and DIN- Director Identification Number
The first step for the microfinance registration is to obtain the DSC and DIN for its directors. This is used for authorising the digital e-forms.
b. Name Approval of the Company
Take the approval of the name of the Company under Form INC-1. The name must suggest that the Company is registered as the Section 8 Company. So the words must be used at the end.
c. MOA –Memorandum of Association and AOA- Article of Association
The Company filed its MOA and AOA, after the name approval of the Microfinance.
d. Other relevant documents approval
After the above steps, the Company must file the Form INC-12 and the incorporation certificate, to obtain the license.
Documents required as follows:
There are various types of microfinance institutions which are offering credit, insurance and financial training in the rural areas:
The loans are taken for agriculture purposes or associate activities. It is a group of 4 to 10 individuals who are seeking loans, against the mutual guarantee. Here the borrowers are generally the farmers, rural workers, and tenants fall under this category.
These are the group of individuals or the common entrepreneurs with the common socio-economic background have pooled their funds for a short duration, to meet their common interest. These are generally non-profit organisation. The group takes care of the debt recovery. There is no requirement for the collaterals in this kind of lending. Some of the banks are tied up with the SHG’s and offer the loan with the lower interest rate. This group aims at improving the financial condition of the rural areas.
This type of microfinance registration was the model view of the Professor Mohammad Yunus in Bangladesh. In this type of microfinance registration, it created regional rural banks in India. The idea was to create an end to end development of the rural areas.
This type of microfinance registration came to India at the time of independence. Here the resources of the poor were poled, and financial services were provided using that fund.
The best model of microfinance registration in India was the Grameen Model Bank.
Read our article:Micro Finance Company Registration Procedure in India