Microfinance Company Registration – Benefits, Process, Documents

Microfinance Company Registration is done under Section 8. Microfinance Company helps in strengthen the financial conditions by offering people different types of loans.

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Overview on Microfinance Company

Types of Microfinance Company

Benefits of Microfinance Company

Eligibility Criteria for Microfinance Company Registration

Process of Microfinance Company Registration

Documents Required for Microfinance Company Registration

Overview of Private Limited Company Registration

A Private Limited Company is a privately maintained small business existence, which is one of the highly recommended means to start a business in India. The Companies Act 2013 governs private limited company registration in India.

While, minimum 2 shareholders are required to start a private company, while the higher limit of members are 200 as per the Companies Act, 2013. If a private limited company faces financial risk, its shareholders are not subject to sell their personal assets, i.e. they ought to have limited liability.

  • A registered private limited company increases the credibility of your business. A registered private limited company increases the credibility of your business. A registered private limited company increases the credibility of your business.
  • Help owners from personal liability and protects from other risks and losses.
  • Draws more customers
  • Ease in obtaining bank credits
  • Offers limited liability to preserve your company’s assets
  • Greater funds supplement and more attractive stability
  • Enhance the potential to grow big and expand

Starting a private limited company offers many advantages. Some of them are as follows:

Limited Liability
The responsibility of the members of a private limited company is restricted to their share only as the private limited company is a separate legal entity.
Separate Legal entity
A private limited company is a separate legal entity which posses all the rights to sue or to be sued. It acts an artificial person which can buy a property on its own name.
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Minimum loan tenure should not be less than 24 months. If the loan amount is more than Rs.15000 then the repayment can be made by the borrower without any penalty. MFI has to give a loan to eligible borrowers without any collateral or margin money. At least 70% of total loan amount has to be offered to borrowers by MFI for Income generation. Under this, it will be a choice of borrowers to repay the loan amount weekly or fortnight or in monthly installments.
Microfinance Companies are not eligible to charge a higher rate of interest from the prescribed rate of interest and maximum variation cannot exceed 4% while if we talk about loan processing charges then it cannot exceed 1% of the gross loan amount. MFI can levy loan insurance charges separately.
Yes, the loan can be given for the personal purpose of the borrowers by MFI, the however aggregate amount cannot exceed 30% of the total loan.
No, prepayment penalty cannot be levied by MFI.
The total cost will be around Rs.8,00,000 out of which Rs. 5,00,000 will be the professional fees and rest will be the government fees. If you are thinking that professional fees are quite high, then you are wrong as it is a very complex and time-consuming process.

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