How to Start a Small Finance Company in India?

India is a rapidly developing economy, with a diverse population and a large bank of talent. However, a significant portion of the country’s population resides in rural and semi-urban areas, where the traditional banking services are yet to make a mark. Individuals and businesses belonging to the lower-income group are unable to find secure channels of credit. Due to this shortage, they are forced to rely on informal financial sources that overcharge them significantly. The introduction of Non-Banking Financial Companies (NBFC) has reduced this gap to a large extend, and the introduction of small finance companies has further allowed lower-income groups to access quality credit for their requirements. This guide lays down the complete checklist on how to start a small finance company in India.

What is a Small Finance Company in India?

A small finance company or a microfinance institution is a private institution that extends financial services to businesses and individuals belonging to the lower income levels. Small finance companies provide credit services to individuals and businesses that form the lower levels of the income hierarchy.

Many individuals and business are unable to match requirements of traditional banking institutions that require a credit background and substantial disposable income. Micro or small finance companies provide financial resources to their customers for their personal or professional financial necessities. Individuals, self-employed professionals and businesses can fulfil their entrepreneurial dream or fulfil a personal financial emergency by availing small-size loan from a micro finance company.

About its author (SwaritAdvisors)

Swarit Advisors.com is technology motivated platform establishing the specialized legal & Financial advisory services in India. We are dedicated to helping startups and MNC in solving legal, Taxation and compliance related to starting and running their business around the world.

Please watch our video about SwaritAdvisors: