October 7, 2026 · Guides

Microfinance Company vs NBFC-MFI: What the Software Must Handle

NBFC MFI software has to do more than record loans and collections, because the entity behind it is regulated by the RBI and must report accordingly. A microfinance company, a society and an NBFC-MFI may all sit in the same village and meet the same borrowers, yet their books, returns and controls differ. This post explains what the software must handle for each, and the questions to ask before you buy.

In this guide

Same borrower, different entities
What NBFC software must handle
Reports and returns
Common mistakes
What to check in a demo
Related reading
FAQs

Same borrower, different entities

People use the word microfinance loosely. In practice the rules depend on the form of the entity. A society follows its State or Multi-State co-operative law. A Nidhi follows Section 406 of the Companies Act 2013 and the Nidhi Rules 2014. An NBFC, including an NBFC-MFI, follows RBI directions. Our note on Nidhi company versus microfinance company sets out how these differ for a founder choosing a structure.

Software does not choose the structure for you, and it cannot make an activity lawful. What it can do is keep the records, limits and reports of each entity clean. Please check the current Act, Rules or RBI direction with your CA before you configure anything.

Entity	Governing law or regulator	What software should keep separate
Co-operative society	State or Multi-State co-operative law	Member, share and loan records under society rules
Nidhi company	Companies Act 2013, Nidhi Rules 2014	Member-only dealing and the Nidhi return set
NBFC / NBFC-MFI	RBI directions	RBI-style reports, borrower records, controls

What NBFC software must handle

An NBFC does not run on goodwill and a register. It runs on documented process. When a regulator or auditor asks how a loan was sanctioned, the system should answer. Look for these:

Borrower records. Verification and KYC kept with every loan. We cover this in KYC, credit bureau and reports in microfinance software.
Loan ageing. Overdue amounts grouped by how long they have been unpaid, which later feeds provisioning and reporting.
Access control. Maker and checker roles, with a user activity log. The Taxhint page lists multi-tier access control and user activity logs.
Branch-wise accounts. Each branch with its own books that roll up to the head office.
Digital collection. The page lists NACH support, payment gateway and QR payments, and a collection app for field staff.
Audit trail. Every edit traceable to a user and a time.

If you are still deciding whether to register as an NBFC, our NBFC registration page explains the process from the compliance side.

Reports and returns

This is where a general loan system and an NBFC-grade system part ways. The Taxhint microfinance software page lists statutory compliance reports, including auto-generated RBI reports. That is a useful starting point, but the exact returns you file depend on your category and the current RBI directions. We will not list figures or formats here, because they change.

What you can test is the quality of the data behind them. Can the system show the portfolio by branch, by officer and by overdue age? Can it reproduce the same report for a date three months ago? Can your CA tie the report to the ledger? Our microfinance software cost post explains why reports and customisation show up as separate lines in a quote.

Common mistakes

Buying before choosing the entity. The software has to match the structure, not the other way round.
One database for two entities. Mixing a society’s members with an NBFC’s borrowers makes the books impossible to separate.
Trusting the brochure. A feature on a page is not the same as a report your auditor accepts.
Skipping the CA review. Have your CA see the reports before go-live, not after the first notice.
Everyone as administrator. Maker and checker only work when rights are real.

What to check in a demo

Ask which reports are generated automatically and ask to see each one filled with data.
Open the activity log and trace one edited loan.
Create two entities and confirm their ledgers and users do not mix.
Run a branch-wise and officer-wise overdue report.
Test the field collection flow on a phone.
Ask how data is backed up and exported.

For the wider comparison, read our microfinance software buyer’s guide and the loan and society management software guide.

Want to see this working on your own data? See the micro finance software, ask for a live demo on +91 93117 95484, or write to mail@taxhint.in.

FAQs

Is NBFC-MFI software different from ordinary loan software?

The loan engine is similar, but an NBFC-MFI needs reporting and controls that follow RBI directions. Check the current directions and ask the vendor to show the reports, not just promise them.

Does Taxhint microfinance software have RBI reports?

The product page lists statutory compliance reports, including auto-generated RBI reports. Ask for a demo of the exact returns your entity files, since the set differs by entity type.

Can one software handle a society and an NBFC at the same time?

Only if it keeps entity-wise books and rules separate. Different entities should have different ledgers, users and reports, even when one team operates them.

Can software make a microfinance activity legal?

No. Whether you may lend, and to whom, is decided by your registration and the law that governs you. Confirm that with your CA or CS before choosing software.