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Microfinance company registration refers to the process of incorporating an entity to serve small-ticket financial services to low-income individuals and micro-enterprises. NABARD defines the registration of microfinance institutions to provide thrift, credit, and other financial services to the rural. semi-urban and urban areas in order to meet their specific financial needs.
Over the years, the microfinance company registration has emerged as a unique economic development helping crores of underprivileged people who have no collateral and would not otherwise qualify for a standard bank loan. Start running your microfinance company with great precision, expertise, and a thorough understanding of communities, the Section 8 company registration process, and compliance with other basic requirements. Top 3% of the fintech leaders trust us. Now, it’s your turn.
The reasons for which the applicants must register as a microfinance company in India are as discussed below:
Registered microfinance companies offer better repayment rates to accommodate small-ticket loans and maintain borrower relationships.
Registering as a microfinance company in India provides easy funding options for investors, often with the intention of supporting the growth of the underprivileged sector.
Registering as a microfinance company provides strong rural support, where traditional banks have a limited presence and offer effective financial services in India.
Registering as a microfinance company offers multiple tax advantages and exemptions, thereby reducing the overall financial burden of small businesses.
Registering a microfinance company under the RBI regulations helps set flexible interest rates, thereby helping them sustain operations and cover risk when dealing with small-ticket.
Registering a microfinance company under Section 8 of the Companies Act, 2013, provides operational flexibility, meaning no strict minimum capital is required to start lending operations.
The entities applying for microfinance loan company registration must comply with the following key eligibility criteria, as discussed below:
The list of entities eligible to apply for microfinance company formation is as follows:
The applicants seeking microfinance company registration online must gather the following necessary documents, as provided below:
Given below are the steps to register a microfinance company in India-
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The different types of microfinance companies registered based on the type of legal structure, distinct regulatory requirements, capital threshold, and operational scope are discussed below:
NBFC-MFI, which stands for Non-Banking Financial Institution-Microfinance Institution, is a non-deposit-taking NBFC, eligible to provide microcredit to low-income groups, people in rural areas, and economically weaker sections having no access to traditional banking services.
Section 8 company is a special type of non-profit organisation registered under the Companies Act, 2013, in combination with the microfinance operations to provide small loans & financial services to the economically disadvantaged group of society.
A society is a form of non-profit, community-based microfinance entity registered under the Societies Act, 1860, to provide localised & welfare-oriented services to low-income populations in India.
A trust is a form of microfinance company registered under the Indian Trusts Act, 1882, with the ability to undertake commercial expansion and limited fundraising options, especially in NGO-led microfinance initiatives.
A cooperative society is a microfinance company that is autonomously formed as an association of people united to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled business.
A Nidhi company is a form of microfinance company registered with the objective of cultivating the habit of thrift and saving among its members, receiving deposits from and lending to its members for their mutual benefit.
The key differences between NBFC-MFI and Section 8 companies, both categorised as different types of microfinance companies in India, are discussed below:
| S. No. | Aspect | NBFC-MFI | Section 8 Company |
|---|---|---|---|
| 1 | Purpose | NBFC-MFI is registered with the main purpose of providing commercial lending options. | A Section 8 company is registered with the main objective of reinvesting all profits into its charitable purpose without paying dividends. |
| 2 | Preferred by | It is mostly preferred by low-income households, women entrepreneurs, and small business owners in rural and semi-urban areas. | Mostly preferred by startups, NGOs, or budding entrepreneurs having limited funds but a highly social vision. |
| 3 | RBI Approval | Mandatory to obtain RBI approval. | RBI approval is not mandatorily required. |
| 4 | Minimum NOF | A minimum net owned fund of Rs. 5 crores is required. | No statutory minimum NOF is required. |
| 5 | Loan Limit | The loan amount must be no more than 10% of total assets. | There is no provision for unsecured loans of Rs. 500000 for small businesses. |
| 6 | No. of Directors | At least 2 directors are required, with 1 director having 10+ years of experience in financial services. | At least 2 directors are required, with no mandatory requirement of prior experience. |
| 7 | Status of Organisation | It is a profitable organisation. | It is a non-profit organisation. |
| 8 | Governing Law | RBI (Master Direction for NBFCs) | Companies Act, 2013 / MCA |
The microfinance companies licensed in India must comply with the following post-microfinance company license requirements, as provided below:
Registered microfinance companies must file monthly and quarterly returns through NBS-7 for their microfinance activities, including loan portfolio, borrower data, interest rates, NOF status, and geographic distribution.
Registered microfinance companies must file monthly and quarterly returns through NBS-7 for their microfinance activities, including loan portfolio, borrower data, interest rates, NOF status, and geographic distribution.
The registered microfinance companies must file annual return forms NBS-9 and MGT-7 to submit comprehensive annual data to the RBI.
The registered microfinance companies must file annual return forms NBS-9 and MGT-7 to submit comprehensive annual data to the RBI.
The microfinance companies registered in India must annually prepare a statutory audit report concerning financials, along with the auditor’s compliance certificate.
The microfinance companies registered in India must annually prepare a statutory audit report concerning financials, along with the auditor’s compliance certificate.
Post-microfinance company licensing, the entities must file ALM returns confirming details of asset-liability management data as per the RBI ALM framework.
Post-microfinance company licensing, the entities must file ALM returns confirming details of asset-liability management data as per the RBI ALM framework.
Registered microfinance entities must file the financial statement form AOC-4 with the Registrar of Companies annually.
Registered microfinance entities must file the financial statement form AOC-4 with the Registrar of Companies annually.
The registered entities must maintain corporate records, statutory registers, and minutes of the annual general meeting within 6 months of the end of the financial year.
The registered entities must maintain corporate records, statutory registers, and minutes of the annual general meeting within 6 months of the end of the financial year.
Entities registered as microfinance companies must file income tax returns, GST returns, TDS/TCS returns, and transfer pricing documentation for related-party transactions.
Entities registered as microfinance companies must file income tax returns, GST returns, TDS/TCS returns, and transfer pricing documentation for related-party transactions.
The registered entities must strictly adhere to the fair-practice code for carrying out all lending and recovery operations in India.
The registered entities must strictly adhere to the fair-practice code for carrying out all lending and recovery operations in India.
The microfinance institutions must maintain a robust customer grievance redressal mechanism with escalation to the RBI Ombudsman if unresolved.
The microfinance institutions must maintain a robust customer grievance redressal mechanism with escalation to the RBI Ombudsman if unresolved.
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We help establish robust grievance redressal support to create environmentally sustainable, compliant, and thriving microfinance institutions that serve communities.
Connect with our experts to get timely updates and compliance insights needed for successful microfinance company registration in India.
We provide post-compliance registration support to eliminate any penalties, restrictions, or revocation of the microfinance company registration in India.
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At Corpbiz, we have served 10,000+ business startups, SMEs, and small enterprises across every state in India.
We’ve over 10 years of experience for microfinance company registration in compliance with RBI guidelines for carrying out lending operations in India.
Our expertise in end-to-end registration services helps entities incorporate and manage compliance for their lending businesses in India.
We offer PAN-India customer support services to entrepreneurs intending to start their lending operations with a microfinance setup across major cities in India.
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Legal Researcher
Written by Neha Dawra. Last updated on Jun 7 2026, 11:31 PM
Neha Dawra has 4+ years of experience in legal research and intellectual property advisory. Her expertise lies in analyzing IP laws, drafting structured legal content, and simplifying complex registration procedures into clear, simple insights.
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