Money is a core part of our life, whether we are doing any business or living our standards, it is true that without money nothing is possible. In our Country, Micro Finance plays a vital role, because there are so many small businesses and individual persons, who require money in small. The problem is that banks and other financial institutions can not help such small businesses and individuals due to non-eligibility or high formalities of documents.
Therefore, social needs do not fulfill and hence the small businesses could not be capable to grow with the market and consequently, they dissolved.
Section 8 microfinance company is the best solution for all those, who seek funding without hurdles. It objects to provide the credits with the motive of helping people, who really need money at small level.
Therefore, Section 8 Company is a Social Non-Profit Organization and it is registered under section 8 of Companies Act, 2013. It was earlier known as Section 25 Company as per Companies Act, 1956.
RBI Approval does not require for Section 8 Micro Finance
Section 8 Micro Finance Companies are exempt from RBI License. RBI under its notification RBI/20011-12/384
Ref.DBOD.No.Ret.BC 77/12.06.132/2011-12 has notified that Section 8(earlier known as section 25) Companies are exempted from RBI License.
Section 45-IA, 45-IB, and 45-IC of the RBI ACT, 1934 shall not apply to any non-banking financial company which is :
- engaged in micro-financing activities, providing credit not exceeding Rs. 50,000 for a business enterprise and Rs. 1,25,000 for meeting the cost of a dwelling unit to any poor person for enabling him to raise his level of income and standard of living;
- licensed under Section 8 (earlier it was section 25 of 1956) of the Companies Act, 2013;
- not accepting public deposits as defined in paragraph 2(1) (xii) of Notification No. 118 /DG (SPT)-98 dated January 31, 1998.
What is the Loan limit on Section 8 Micro Finance Companies
1. The loan Limit is depending upon the basis of the rural and urban areas.
- A borrower with a rural household annual income not exceeding Rs. 1,00,000 or urban and semi-urban household income not exceeding Rs. 1,60,000 will be eligible;
2. The loan amount will not exceed Rs. 60,000 in the first cycle and Rs. 1,00,000 in subsequent cycles;
3. The total indebtedness of the borrower will not exceed Rs. 1,00,000
4. Tenure of the loan not to be less than 24 months for loan amount in excess of Rs. 30,000 with prepayment without penalty;
5. Loan to be extended without collateral;
6. The aggregate amount of loans, given for income generation, is not less than 50 percent of the total loans given by the MFIs.
7. The loan is repayable on weekly, fortnightly, or monthly installments at the choice of the borrower.
Advantages of Section 8 Micro Finance Company
- Formed for Social Benefits – Section 8 Company is formed for Social benefits like providing credit to poor people and small businesses. Its object clearly states the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, environment protection, or such other like objects.
- Exempt from RBI Approval – Section 8 Micro Finance Companies are exempt from RBI License vide its Notification No. RBI/20011-12/384 Ref.DBOD.No.Ret.BC 77/12.06.132/2011-12.
- Fewer Compliances – Section 8 Company is an NGO and accordingly the compliances are very less comparatively the other Non-banking finance companies having Licence with the Reserve Bank of India.
- Legal Status – Section 8 Company is legally registered with the Registrar of Companies (ROC) and providing Credits to small businesses and people, it can sue in the case of non- payment and defaulting of repayment.
- Collateral free Credit – It is the essential feature of Section 8 Company. It can provide the collateral-free Credit for helping poor people.
List Documents Required for Registration of Section 8 Companies
- KYC of at least 2 Person (PAN, Aadhaar, Photo, Email, Mobile, Bank Statements)
- Company Name
- Company Office Address (Rent Agreement/ Property Papers with electricity bill)
On the basis of the above documents, VAKIL KARO EXPERT will file the Registration documents to ROC and help you to register your Section 8 Micro Finance Company.
PROCEDURE TO REGISTER SECTION 8 MICROFINANCE WITH "VAKIL KARO" VAKIL KARO EXPERT helps you to register the Section 8 Micro Finance Company with the following procedure ---
1.Application for Name Approval – After the collection of Documents, our Expert will file the name approval application by filling the "RUN" form at ROC. Once the Name is Approved, it is valid for 20 days from the date of approval.
2. Application for Digital Signatures (DSC) – Our Expert will guide to approve and verify the class -2 Digital Signatures, which it requires for digital signs of ROC Documents.
3. Drafting of MOA & AOA – Drafting of Memorandum of Association and Articles of Association is an essential part of the Registration process, and it requires expertise and professional skills. These documents are the core documents of the company because it contains the objects and activity to be pursued by the company.
4. Drafting of SPICE Forms – SPICE means the Simplified Performa of Incorporation of Company Electronically, it is also the essential work of company registration, because it contains the major details of persons and name of the Company and Activity code of the Company.
5. Submission of Documents at ROC – When all the documents are completed with, VAKIL KARO EXPERT submit all the documents at ROC for the Registration of Company and the Registrar shall issue the Certificate of Registration/ Incorporation (COI) in a specified format. It means the Company is Registered from the date of the Certificate issued. IS GST Required for Section 8 Companies?
Section 8 Company is the Company helping poor people and small businesses and it is formed for social benefits. It provides Credit within a specified limit. And hence on the Credit Services, GST is not applicable.
Why I choose "VAKIL KARO" & why not "OTHERS"
TEN Reasons why you should Choose VAKIL KARO ---
- Special Expert Allotted – We treat Our Clients equal to "GOD" therefore, we give him the superior priority on their work by allotting Special Expert unlike "OTHERS" where the calls are picked up by the different executives every time.
- Transparency of Services – Our all the Services are Transparent with our clients, because what we have committed with," we do".
- Confidential Information – Information and details of our clients are the "PRECIOUS ASSETS" for us and we do not share the details with others so that the long term relation can be retained.
- Reasonable Fee – Our all the Services are provided with a reasonable fee so that our client can afford it easily. We believe in the policy of "Salt in Flour" and not in "Flour in Salt" like others.
- Bundle of services – Once you have hired the VAKIL KARO, for availing of services, you do not need to go anywhere, because we have one roof solutions for all corporate, Taxation, Civil, Criminal related services.
- Timely Response- When you think about your Professionals, it matters that the response should be in time for your problems which is the core part, VAKIL KARO provides you a timely solution for all the legal problems.
- FREE ADVICE ON CALL – VAKIL KARO is the identity of "TRUST & BELIEVE", and we believes on our clients that they are the part of VAKIL KARO FAMILY, Consequently, we gives him free advice on call, when they are in any problem.
- Fee Safety- VAKIL KARO provides the fee safety by providing multiple options for making payments like Payment Gateway, Pay Later facility, EMI facility, NET Banking, UPI payments, etc.
- 100 % Fee Refundable – Anyways, if you are not satisfied with us, we provide the facility of hundred percent fee refund.
- One Name for All Services – VAKIL KARO is the only name, which provides you all the services like Corporate, Taxation, Civil, Criminal Services under a roof, so that our clients can face ease for all the services.