Can a Section 8 company do microfinance?

Yes, provided its MOA has specific microfinance objects and it adheres to the RBI's exemption criteria for small-scale lending.

Do I need an RBI license for this?

Section 8 companies are generally exempt from RBI NBFC registration if they provide small loans (under specific limits) and do not accept public deposits.

What is the maximum loan I can give?

While there is no hard limit for all cases, the RBI exemption typically covers small loans (e.g., up to ₹50,000 for rural) meant for income-generating activities.

Can I take profit out of the company?

No. A Section 8 company is non-profit. All surplus funds (profits) must be used to promote the company's social and lending objects.

How is it different from an NBFC-MFI?

An NBFC-MFI is a commercial entity with a ₹10 Cr capital requirement. A Section 8 MFI is a social entity with no minimum capital requirement but lower lending limits.

Can I get a bank loan for my Section 8 MFI?

Yes, many public and private banks have dedicated departments for lending to MFIs and NGOs for on-lending to the poor.

Is interest rate regulated?

Yes, MFIs must follow the RBI's guidelines on 'Fair Practices' which include caps on interest rates and processing fees.

How long does the registration take?

The entire process for Section 8 MFI incorporation usually takes 30 to 45 working days.

Service

Section 8 Microfinance Company Registration | NGO MFI

Register a Microfinance company under Section 8 of the Companies Act. No RBI NBFC license required for certain loan limits.

Financial Inclusion through Social Enterprise

Register a Microfinance company under Section 8 of the Companies Act. No RBI NBFC license required for certain loan limits.

Empower the underserved with small loans. Register a Section 8 Microfinance Company to provide collateral-free credit to low-income groups and self-help groups.

The social impact model for small-scale lending. Provide micro-loans to those without access to traditional banking through a non-profit company structure.

A Section 8 Microfinance Company is a unique model in India that allows a non-profit company to engage in small-scale lending activities. It is registered under Section 8 of the Companies Act, 2013, with the primary objective of promoting charity, social welfare, or financial inclusion. Unlike commercial NBFC-MFIs, these companies are exempt from many stringent RBI regulations, provided they adhere to specific loan size and interest rate limits.

This model is particularly popular among NGOs and social entrepreneurs who want to provide collateral-free loans to individuals or Self-Help Groups (SHGs) for income-generating activities. Because there is no minimum capital requirement of ₹10 Crores (as required for NBFCs), it provides an accessible entry point for those dedicated to social impact.

QuickTaxperts provides specialized assistance in setting up Section 8 Microfinance companies. We help you draft the specific 'Non-Profit' objects, obtain the license from the Regional Director of MCA, and advise on the operational guidelines set by the RBI to ensure your lending activities remain legally exempt from NBFC registration.

Category: Financial Services
No requirement for RBI's CoR for small-scale lending.
SURPLUS (profit) must be used only for promoting the company's objects.
Can provide loans for both agriculture and non-agriculture purposes.
Builds a professional identity for attracting donor funds and bank credit.
No RBI NBFC license required (up to specific loan limits)
Non-profit structure with a focus on social welfare
Lower capital requirement compared to NBFC-MFIs
Ideal for rural development and women empowerment programs

The RBI Exemption Framework

How to stay legal without an NBFC license.

Loan Limit: Individual loans are typically restricted (usually up to ₹50,000 for rural and ₹1.25 Lakh for urban households).
Interest Rate Cap: Must follow the interest rate guidelines set for MFIs (usually based on cost of funds + specific margin).
Social Focus: Loans must be primarily for income-generating activities or specific household needs.
No Public Deposits: Section 8 MFIs are strictly prohibited from accepting deposits from the public.

Documents required

Document requirements vary by entity type, state, premises, and authority. These are the usual groups we verify before submission.

Mandatory Documents: Digital Signature Certificate (DSC) of all Directors.; DIN (Director Identification Number) of all Directors.; Proposed MOA & AOA with 'Microfinance' and 'Social' objects.; Detailed Project Report showing the social impact and lending model.; 3-year Financial Projections and Source of Funds statement.; PAN Card and KYC of all Directors and Shareholders.; NOC from the owner of the registered office premises.

Our MFI Registration Workflow

From social mission to registered company in five steps.

Step 1: Digital Signature: Obtaining DSCs for the proposed directors and shareholders of the company.
Step 2: Name Approval: Filing for a name that reflects the social/microfinance nature of the business (e.g., 'Foundation', 'Society').
Step 3: Section 8 License: Filing Form RD-1 with the Regional Director (MCA) to obtain the non-profit license.
Step 4: Incorporation: Filing the SPICe+ form with the ROC for the final incorporation of the Section 8 company.
Step 5: PAN & TAN: Automatic allotment of PAN and TAN, followed by the opening of a bank account for lending operations.

Operational Norms for Section 8 MFIs

Key rules to follow.

Reporting to RBI: Requirement to provide periodic information to the RBI's regional office if requested.
Self-Regulation: Encouraged to join an SRO (Self-Regulatory Organization) like MFIN or Sa-Dhan.
KYC Norms: Strict adherence to KYC (Aadhaar/Voter ID) for all borrowers.
Transparency: Clear disclosure of interest rates and terms in the local language of the borrower.

Deliverables

After completion, we share organized acknowledgements, references, and next-step guidance for banking, renewals, or future filings.

Section 8 License from the Regional Director
Certificate of Incorporation (COI)
Approved MOA & AOA with Microfinance objects
Lending Policy and Operations Manual template

Expert review

Section 8 Microfinance Company Registration | NGO MFI content is reviewed by QuickTaxperts Financial Advisory, NGO & Microfinance Consultants.

Checklist-led review
Document pre-verification
Authority-specific next steps

Frequently asked questions

These quick answers cover common planning questions before you request a checklist or quote.

Can a Section 8 company do microfinance?: Yes, provided its MOA has specific microfinance objects and it adheres to the RBI's exemption criteria for small-scale lending.
Do I need an RBI license for this?: Section 8 companies are generally exempt from RBI NBFC registration if they provide small loans (under specific limits) and do not accept public deposits.
What is the maximum loan I can give?: While there is no hard limit for all cases, the RBI exemption typically covers small loans (e.g., up to ₹50,000 for rural) meant for income-generating activities.
Can I take profit out of the company?: No. A Section 8 company is non-profit. All surplus funds (profits) must be used to promote the company's social and lending objects.
How is it different from an NBFC-MFI?: An NBFC-MFI is a commercial entity with a ₹10 Cr capital requirement. A Section 8 MFI is a social entity with no minimum capital requirement but lower lending limits.
Can I get a bank loan for my Section 8 MFI?: Yes, many public and private banks have dedicated departments for lending to MFIs and NGOs for on-lending to the poor.
Is interest rate regulated?: Yes, MFIs must follow the RBI's guidelines on 'Fair Practices' which include caps on interest rates and processing fees.
How long does the registration take?: The entire process for Section 8 MFI incorporation usually takes 30 to 45 working days.