have an account?【sign in】how to register a small finance company in india?
goolsbyauthorIndia's financial sector has witnessed significant growth in recent years, with the establishment of small finance banks playing a crucial role in promoting financial inclusion. To become a small finance bank, it is essential to follow the correct procedure for registration. In this article, we will guide you through the steps involved in registering a small finance company in India.
1. Determine the type of small finance company
Before starting the registration process, it is essential to determine the type of small finance company you want to establish. There are two types of small finance companies: small finance banks and micro finance institutions. The former is a commercial bank licensed under the Bank License Act, 2013, while the latter is a non-banking financial company registered under the Non-Banking Financial Companies Regulation, 2016.
2. Obtain necessary permits and approvals
Once you have decided on the type of small finance company, you must obtain the necessary permits and approvals from the relevant authorities. For small finance banks, this involves applying for a bank license from the Reserve Bank of India (RBI). For micro finance institutions, you need to register with the RBI under the Non-Banking Financial Companies Registration, 2016.
3. Comply with minimum capital requirements
Before applying for a bank license, you must meet the minimum capital requirements set by the RBI. For small finance banks, the minimum paid-up equity capital is INR 100 crore, while for micro finance institutions, it is INR 5 crore. You must also maintain this minimum capital level throughout the life of the company.
4. Submit the required documents for registration
Once you have complied with the minimum capital requirements, you can submit the required documents for registration. For small finance banks, these documents include an application form, business plan, project report, and other relevant documents. For micro finance institutions, the documents include an application form, business plan, financial statement, and other relevant documents.
5. Obtain tax identification number (TIN) and bank account
Once your small finance company is registered, you must obtain a tax identification number (TIN) from the Income Tax Department. This is required for tax compliance and is essential for any business operating in India. Additionally, you must open a bank account for your small finance company and start preparing your financial statements.
6. Obtain relevant licenses and permits
Lastly, you must obtain any necessary licenses and permits from the relevant authorities, such as licensing from the Financial Sector Regulatory Authority (FSRA) for small finance banks.
Registration of a small finance company in India is a complex process that requires thorough planning and execution. By following the steps outlined in this article and complying with the necessary regulations, you can successfully establish and operate a small finance company in India. Remember to seek professional advice and guidance throughout the registration process to ensure a smooth and successful launch of your small finance company.