Documents Required
Documents Needed to Register a Microfinance Company
A complete and accurate set of documents is essential for a smooth registration process. The required documents are categorized below.
Documents for All Directors and Shareholders
For everyone who will be a director or an owner (shareholder) in your company, you will need to provide some personal documents. These help prove who they are and where they live.
PAN Card: This is very important for all Indian directors and shareholders. It's like their special tax ID number.
Aadhaar Card: For Indian directors and shareholders, this is key proof of their identity and home address.
Passport: If any of your directors are from another country, their passport is a must-have document.
Proof of Home Address: You will need a recent document that shows your home address. This could be a bank statement, an electricity bill, a phone bill, or a mobile bill. Make sure it's not older than two months when you apply.
Passport-sized Photos: You'll need a few recent color photos of each director and shareholder.
Email ID and Phone Number: These are needed for official messages and to set up your online accounts during the registration process.
Documents for the Company's Main Office Address
Your company needs an official address where it will be registered. Even if your business starts small, you must show proof of this place.
No Objection Certificate (NOC): If you are renting your office space, you'll need a letter from the landlord. This letter should say they are okay with your company being registered at their address.
Rental Agreement/Lease Document: If you are renting the office, you'll need a copy of the agreement you signed with the landlord.
Electricity Bill/Utility Bill: To prove that the address is being used, you'll need a recent electricity bill, gas bill, or water bill for that property. This bill should also not be older than two months.
Sale Deed/Property Papers: If the office property belongs to the company itself or one of its directors, then you'll need copies of the official papers that show who owns the property.
Company and RBI-Specific Documents (for NBFC-MFI)
If you are registering an NBFC-MFI (the type of microfinance company that aims to make a profit), you will need extra papers specifically for the RBI application. These are added to the general papers needed for setting up any company.
Company's Legal Papers (Certificate of Incorporation, MOA, AOA): These are the main legal documents of your company. You get them when you first register your company.
Audited Financial Reports: You'll need financial reports for your company and its main owners (promoters/directors) from the last three years. These reports must be checked by a professional accountant. They show your financial history.
Banker's Letter: This is a very important paper from your bank. It confirms that your Net Owned Fund (NOF) has been deposited. It must also clearly state that this money is "free from any lien." This means the money isn't tied up as security for any other loan.
Board Resolutions: These are formal decisions made by your company's directors. They specifically state that your directors plan to apply for an NBFC license from the RBI.
Detailed Business Plan: The RBI wants to see a clear plan of how your microfinance company will work. This includes who you will lend money to, how you will manage your loans, how much money you expect to make, and how you will handle any risks.
System Audit Report: For bigger NBFCs, a report on your computer systems might be needed. This shows that your technology is safe and works well.
KYC Policy: You must have a "Know Your Customer" (KYC) policy. These are rules that explain how your company will properly identify and check its customers. This helps prevent illegal activities like money laundering.
Fair Practices Code: This document explains how your company will treat its customers honestly and fairly. It covers things like how interest rates are set, how loans are given out, and how customer complaints will be handled.
Fees & Capital for Microfinance Company Registration
The costs involved depend heavily on the legal structure you choose. We'll look at the fees and the main money you need for both types.
Cost for Section 8 Micro-Credit Company
If you choose to start a Section 8 company to offer micro-credit, the costs are much lower. This is because you don't need a huge amount of starting money like the other type of company.
Government Fees: These are the charges you pay to the government for different steps. For example, getting a digital signature for directors might cost around ₹2,000 to ₹4,000 per person. Getting a director ID number is usually about ₹500. Naming your company costs ₹1,000. And applying for the special Section 8 license usually costs between ₹2,000 and ₹3,000. The fees for officially registering the company itself vary, but they are generally a few thousand rupees. You also pay a small amount called stamp duty, which depends on where you live.
Professional Fees: You might want to hire experts like lawyers or accountants to help with all the paperwork. Their fees can range from about ₹20,000 to ₹50,000 or more, depending on how much help you need.
So, without including expert help, government fees for a Section 8 company are usually just ₹5,000 to ₹10,000. If you add in expert help, the total cost might be around ₹25,000 to ₹60,000.
Costs for an NBFC-MFI
Starting an NBFC-MFI, which is a for-profit kind of microfinance company, costs a lot more. This is mainly because of the large amount of money you need to have set aside.
Application Fee: When you apply for your license from the RBI, there's a fee you must pay. This fee is currently ₹3,00,000, and you don't get it back even if your application isn't approved.
Minimum Capital (NOF): This is the biggest money requirement. You need to have a "Net Owned Fund" (NOF) of ₹5 crore. This is money your company must truly own and keep. If your company is in a Northeastern state of India, this amount is ₹2 crore. This isn't a fee you pay to someone, but money you must have in your company's bank account
