A Microfinance Company (MFI) is a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI) that provides financial services to low-income individuals, small entrepreneurs, and underserved communities who lack access to traditional banking. We offer comprehensive assistance in obtaining NBFC-MFI registration, ensuring compliance with RBI guidelines, and setting up operations to serve rural and semi-urban populations with micro-loans, savings products, and financial literacy programs.
" Microfinance is the key to financial inclusion – empowering individuals at the grassroots level to break the cycle of poverty through accessible credit, savings opportunities, and financial education. "
Setting up an NBFC-MFI requires meeting stringent RBI requirements including minimum Net Owned Fund (NOF) of ₹5 crores, qualifying asset criteria, and adherence to fair practice codes. Our team guides you through company incorporation, RBI application process, documentation, and ongoing compliance requirements to establish a successful microfinance institution.
Microfinance companies serve underbanked populations, providing essential financial services while generating sustainable returns through interest income on micro-loans and group lending programs.
NBFC-MFI (Non-Banking Financial Company - Micro Finance Institution) is a specialized category of NBFC regulated by RBI that focuses on providing micro-credit to economically weaker sections. Unlike regular NBFCs, an NBFC-MFI must have at least 85% of its net assets as qualifying assets (micro-loans), loans must be given without collateral, and borrower household income must be within RBI-specified limits. The maximum loan amount and interest rate margins are also regulated under the MFIN guidelines.
The minimum Net Owned Fund (NOF) requirement for NBFC-MFI registration is Rs. 5 crore for companies operating in the North-Eastern Region of India and Rs. 5 crore for entities in other regions as per current RBI guidelines. However, this has been increased to Rs. 10 crore as per recent regulatory updates. The NOF must be maintained in liquid assets and should be fully paid-up capital without any borrowings included in the calculation.
Key documents include: Certificate of Incorporation, Memorandum and Articles of Association, Board resolution for NBFC-MFI business, audited financial statements for last 3 years, business plan with 5-year projections, Fair Practices Code, KYC/AML policy, credit policy, IT policy, board-approved policies on interest rates and collection, net owned fund certificate from CA, banker's report, credit information report of directors, and personal net worth statements of all directors and shareholders holding 10% or more shares.
The complete NBFC-MFI registration process typically takes 6-12 months from the date of application submission, depending on RBI's processing time and completeness of documentation. The process involves company incorporation (2-3 weeks), preparation of comprehensive documentation and policies (4-6 weeks), online application filing through RBI's COSMOS portal, RBI scrutiny and query responses (3-6 months), and final approval and Certificate of Registration issuance. Delays can occur if directors fail background verification or documentation is incomplete.
NBFC-MFI must comply with: quarterly and annual RBI returns (NBS-1 to NBS-7), statutory audit and annual financial statement filing, CRAR (Capital to Risk-weighted Assets Ratio) maintenance of minimum 15%, asset classification and provisioning norms, Fair Practices Code implementation, interest rate ceiling compliance, credit bureau reporting, annual MCA filings (AOC-4, MGT-7), GST returns, TDS compliance, board meeting requirements, and internal audit. Non-compliance can result in penalties, show-cause notices, or cancellation of registration.
