Micro Finance Company
This query is : Resolved
CA. Ashish Bihani
(Querist)
02 March 2010
What are various criterias for incorporation of micro finance private limited company? Minimum capital requirement? With own capital of Rs.10 lacs, can we start micro finance company?
Thanks..
Thanks..
02 March 2010
The most important thing to be considered before starting an MFI is to decide on the legal structure of the entity. You can choose to start the microfinance operation by setting up a Trust, Society, Section 25 Company, cooperative or an NBFC. Among these the first four models are not-for-profit models while an NBFC is for profit. An NBFC would have to satisfy with the requirements given for the Net Owned Funds (even though it is an NBFC not accepting deposits)
Once you decide on this, then you might have to think about, the area where you want to serve, setting up a branch in that area, recruitment, training and most important is the way of funding your venture.
With a capital of Rs. 10 lacs you can start an MFI.
Once you decide on this, then you might have to think about, the area where you want to serve, setting up a branch in that area, recruitment, training and most important is the way of funding your venture.
With a capital of Rs. 10 lacs you can start an MFI.
CA. Ashish Bihani
(Querist)
02 March 2010
Should we get an prior approval from RBI for incorporating NBFC?
02 March 2010
RBI approval is required before starting the NBFC activity not before incorporation.
CA. Ashish Bihani
(Querist)
02 March 2010
And also plz let me know procedure for incorporating NBFC with capital of Rs.10lacs.
Thank you so much for your valubale advice.
Thank you so much for your valubale advice.
02 March 2010
With a capital of Rs. 10 lacs you can start an MFI, not an NBFC (profit making). However, if the Company is a Section 25 Company, then the provisions of Section 45IA, 45IB and 45IC of the Reserve Bank of India Act, 1934 (2 of 1934) shall not apply to any non-banking financial company.
For registering as an NBFC (profit making) with the RBI, the Company would be required to reach the minimum level of Net owned funds as prescribed by RBI. (at present Rs. 2 Crores)
There is a long list of documents to be submitted for registration. The company is required to submit its application for registration in the prescribed format alongwith necessary documents for bank's consideration. The bank issues certificate of registration after satisfying itself that the conditions as enumerated in Section 45-IA of the RBI Act, 1934 are satisfied.
For registering as an NBFC (profit making) with the RBI, the Company would be required to reach the minimum level of Net owned funds as prescribed by RBI. (at present Rs. 2 Crores)
There is a long list of documents to be submitted for registration. The company is required to submit its application for registration in the prescribed format alongwith necessary documents for bank's consideration. The bank issues certificate of registration after satisfying itself that the conditions as enumerated in Section 45-IA of the RBI Act, 1934 are satisfied.
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CA. Ashish Bihani
(Querist)
02 March 2010
Thank you so much Rasesh...
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