Registration of Microfinance finance company under Section 8 of the Act

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CMA Sachin Warat (Querist)
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12 April 2022 Whether Microfinance company registered under Section 8 ? if yes, ROC not approving RUN name reservation form due to words like "Micro Benefit/Micro Credit / Micro finance " include in main object clause.

As per RBI Circular stated that Micro Finance Companies Sections 45-IA, 45-IB and 45-IC of the Reserve Bank of India Act, 1934 (2 of 1934) shall not apply to any non-banking financial company which is Circular no. RBI/2015-16/15 DNBR (PD) CC.No.052/03.10.119/2015-16 dated July 1, 2015 (a)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; and (b) licensed under Section 25 of the Companies Act, 1956; and (c)not accepting public deposits as defined in paragraph 2(1) (xii) of Notification No. 118 /DG (SPT)-98 dated January 31, 1998.

Please clarify whether Section 8 Company Can do microfinance business within prescribed limits ?

Please help in this matter. Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 April 2022 No, micro finance company can't be registered as section 8 company.
Register as normal company.

.

CMA Sachin Warat

CMA Sachin Warat (Querist)
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14 April 2022 Sir as per RBI circular Section 25 (Now Section 8) Company can do microfinance business 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 within prescribed limits. Please clarify.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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14 April 2022 Add this in object class it will be allowed.
Microfinance business 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 within prescribed limits.

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