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Sec 8 Micro Finance

06 August 2018

As RBI has exempted Sec 8 companies for taking NBFc licence. Can a Sec 8 company be incorporated for micro finance activity.

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Santhosh Gundinahole (Studnet) (347 Points)
Replied 07 August 2018

No,
As per the provisions of companies Act, 2013.
Section 8 company is not eligible to carry out the activities of NBFC or any other financial activities.
Such activities are-
Investment, Hire purchase, leasing, loan, insurance related or combination of all activities.

Though it is for micro finance activities, objectives of section 8 company is matters to incorporate. You must convene the Registrar that company is not for profit making purpose.

Since the objective of Sec 8 company is to serve the public, hence commercial activities are not allowed in Section 8 company.