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NBFC Microfinance institution (NBFC-MFI) is the financial institution in which a minimum net owned fund is Rs. 5 crores. But in the North Eastern region of the country, it is only Rs. 2 crore. ‘Qualifying assets’ are not less than 85% of its net assets. The income of the NBFC-MFI extracts from the remaining 15 percent of assets shall be in accordance with the regulations specified in that behalf. NBFC which is not in the category of NBFC-MFI shall not allow extending loans to a microfinance sector that in aggregate exceed 10% of its total assets. The term net assets mean total assets other than cash and bank balances and money market instruments. In this article, we will let you know about the NBFC-MFI registration. How it could be done and what are the requirements of NBFC-MFI.
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Qualifying assets are defined as the loan disbursed by an NBFC-MFI to a borrower with a rural household annual income not more than Rs. 1 lakh/ urban and semi-urban household income not more than Rs. 1 lakh 60 thousand. Besides, the amount of loan should not exceed Rs. 60000 in the first cycle and Rs. 1,00,000 in subsequent cycles. The total debts of the borrower shall not exceed Rs. 100000. Moreover, if any loan towards meeting education and medical expenses shall be not be included while arriving at the total debt of the borrower. The tenure of the loan must not less than 24 months for the amount in excess of Rs. 30000 with the prepayment without penalty. For income generation, the aggregate amount of loans must not lower than 50% of the total loans given by the MFIs.
Following are the documents which are required at the time of registration:
In the case of a public limited company, there must be at least 7 members for the incorporation. While in case of private limited company there must be at least 2 members to start with.
There are steps that have to be followed while registering NBFC-MFI:
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