As per se, microfinance company registration is not banned in India and officially, there is no term or news like banning the microfinance business. However, as per the Ministry of Corporate Affairs (MCA) data, very few microfinance companies have been incorporated and which means practically getting microfinance company is difficult.
Types of Micro Finance Companies
There are basically two types of microfinance business that is allowed in India, one is which has to be registered with the Reserve Bank of India (RBI) and another is the non-profit type, which is registered as section 8 company and does not require RBI approval.
Let us talk straightway about the registration status of both the types of microfinance companies:
Micro Finance with RBI Approval: If you want to register this way, then you will require at least 5 crores capital and a registration with the RBI. This type of registration is always open but involves a risk because approval is in the hands of RBI.
Micro Finance without RBI approval: This microfinance approval is one of the best options available in the market. This microfinance is registered under section 8 of companies act and most importantly it does not require RBI license or 5 crore capital.
However, practically, the registrar of Companies is not approving this set of company. According to the recent data, only two Microfinance companies are registered on MCA in last few months. The data clearly shows that it is not banned but yes there is some issue with ROC approval.
Denying in microfinance approval is mainly on account of misuse done by the various companies. Companies illegally accept deposits and then runs away at the time of maturity and hence, catching the eye of the government which ultimately results into the unofficial ban.
Hence, microfinance is not banned in India, the results merely showing the impact of misuse of the facilities by the customers and the companies as well and now, the government on his side doing its best efforts to diminish these problems for not occurring in near future and hence not allowing the people to form microfinance so easily.
Any other easy option?
The best option available currently is the Nidhi Company. Nidhi Company is the only option in finance which can be registered with just Rs.5 lakh capital. Further, here are some additional benefits which are as follows:
The loan can be given at 20%.
Interest on FD can be given at 12.5%.
You can open FD, Saving and RD account.
Capital requirement maximum is 10 lakh.
The existing microfinance companies are doing very well in the market and running successfully but newly micro-financing companies are just facing some complication in registering. For more info, please email us at firstname.lastname@example.org