Microfinance Company

Overview

A Microfinance Company (MFI) is a type of Non-Banking Financial Company (NBFC) that provides small loans and financial services to individuals or groups, particularly in rural and underserved areas. These companies aim to promote financial inclusion by offering credit, savings, and insurance products to low-income individuals who don’t have access to traditional banking. MFIs are regulated by the Reserve Bank of India (RBI) and must comply with its operational and capital norms.

Benefits of Microfinance Company Registration

• Financial Inclusion – Help underprivileged communities access affordable credit.

• Social Impact – Empower women, small entrepreneurs, and self-help groups.

• High Growth Potential – Increasing demand for microfinance in rural and semi-urban India.

• Credibility & Trust – RBI registration enhances reputation among lenders and beneficiaries.

• Revenue Opportunities – Sustainable and profitable business model with social benefits.

• Access to Funding – Easier to raise funds from banks, investors, and development agencies.

Requirements

• Company Incorporation – Must be registered as a Private or Public Limited Company under the Companies Act, 2013.

• Minimum Net Owned Fund (NOF) – ₹5 Crores (₹2 Crores for North Eastern states).

• RBI License – Mandatory Certificate of Registration (CoR) from RBI.

• Management Team – Directors must have a good credit history and relevant experience.

• Permissible Activities – Must provide collateral-free loans, primarily to low-income groups.

Eligibility

• Must be a company registered under the Companies Act, 2013.

• Should have the required NOF as per RBI guidelines.

• Must follow RBI’s directions on interest rates, loan limits, and fair lending practices.

• Directors and promoters must meet RBI’s “fit and proper” criteria.

• Must maintain transparency in operations and regular reporting to RBI.