Microfinance Company Registration in India
Expert assistance for registering your microfinance company under Section 8 of the Companies Act, 2013.
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What is a Section 8 Microfinance Company?
Providing financial aid to businesses excluded from formal banking systems
Microfinance Loan Definition
A Section 8 Microfinance company is registered under the Indian Companies Act, 2013 with the objective of providing financial aid to small business groups that are excluded from the formal banking system.
A household with an annual income of up to ₹3,00,000 can get a microfinance loan without any collateral. The loan should not have any lien on the borrower’s deposit account to ensure it remains collateral-free.
Key Features
- Registered as a non-profit under Section 8
- No RBI license required (with guidelines compliance)
- Can charge interest up to 26% p.a.
- No demographic barriers
- No minimum capital requirement
- Can lend unsecured loans
Registration Process & Requirements in India
Step-by-step guidance for your Section 8 Microfinance Company registration
Documents Required
Registration Process in India
- Aadhaar card and PAN of directors
- Recent bank statements of directors
- Address proof documents
- Passport size photos
- Contact details (phone & email)
- Utility bills
Step 1: Obtain DSC & DIN
Secure Digital Signature Certificate (DSC) and Director Identification Number (DIN) for company formation and electronic form authorization.
Step 2: Name Approval
Submit application for name approval (Form INC-1) with terms like “Sansha”, “Foundation”, or “Micro Credit” to indicate Section 8 registration.
Step 3: Submit MOA & AOA
Prepare and file Memorandum of Association (MOA) and Articles of Association (AOA) with required documentation.
Step 4: Final Submission
Submit all documents including incorporation certificate and Form INC-12 to obtain license.
Registration Fees
The registration fees vary based on authorized capital:
- Government fees (DSC, DIN, name approval, COI): ₹5,000 to ₹2+ lakhs
- MOA/AOA drafting charges: Starting from ₹5,000
- PAN/TAN registration fees
Contact us for exact fee structure based on your company’s requirements.
Latest RBI Guidelines for Section 8 Microfinance Companies
Stay compliant with updated regulations
These guidelines aim to strengthen the microfinance sector by ensuring fair practices and protecting low-income borrowers.
- Monthly repayment cap: 50% of household’s monthly income (max ₹12,500 for ₹3 lakh annual income)
- No prepayment penalties: Borrowers can repay early without charges
- Transparent disclosure: Clear communication of interest rates and charges
- Loan definition: Collateral-free loans to households earning ≤ ₹3,00,000 annually
- Loan amount: Can be expanded up to ₹2,40,000
- NBFC-MFI license: Requires 75% of assets in microfinance
Frequently Asked Questions
Get answers to common queries about Section 8 Microfinance Companies
Can a Section 8 company lend money?
Yes, a Section 8 Company is a convenient option for setting up a Micro Finance Company in India as per the MCA. It doesn’t require extra fees or security deposits and can offer loans at low interest rates as suggested by RBI and the central government.
Which is better: trust or Section 8 company?
Trusts can be formed in 10-15 days with lower costs, while Section 8 Companies take 60-75 days to form. The choice depends on your specific requirements and long-term objectives.
Does Section 8 company have shares?
A Section 8 company can be formed either with a limited share capital or a limited guarantee (with or without share capital).
What are the drawbacks of Section 8 company?
Section 8 companies cannot distribute profits to members and may face more instability than other company types. However, they enjoy certain tax benefits.
Difference between Section 8 company and NGO?
A Section 8 Company is incorporated under the Companies Act to promote commerce, science, art, charity, religion or other useful objects, while an NGO is an organization working for social causes. Section 8 Companies can get government funding more easily.
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