Section 8 Micro Finance Companies are those Companies, which allows doing Micro-Finance Activities to help poor people to maintain their living standards. It has a special advantage that these companies are not required to get RBI License as these are exempted from it.
Section 8 Microfinance companies may consist of the word "Foundation", "Association" " Federation" at the end of its name.
The work activities of all the registered companies in India are identified with its "Memorandum of Association"(MOA). MOA is the core document of a company and it is the constitution of the company, without it, a company is nothing and like a dead-body.
Therefore, it is not necessary that a section 8 Microfinance Company must have the word "Finance" in its name. However, the Memorandum of Association of Company must have the word " Micro Finance" in it to do microfinance activities.
Conclusion - Section 8 Micro Finance companies, are not required to mention the word "Finance" in their name.
Suggested words instead of "Micro Finance"- "Micro" "Micro Services", "Micro Care", "Micro Sewa", "Micro Credit", "Micro Benefits".
Why Ministry does not allow the word " Finance" in the name of section 8 Micro Finance Companies?
Micro Finance Companies play a big role in the Indian Economy to serve poor people in finance which is a very good matter for all but despite this, some may be following reasons that the Ministry does not allow the word "Finance" in the name of Company--
1. Taking illegal deposits- As Section 8 Microfinance Companies are not allowed to take deposits by law like Nidhi Company Registration and Ministry has found some companies taking deposits from people.
2. Runs away from the market - Ministry has found that Companies Registered under section 8 in Microfinance Activities are runs away from the market by doing frauds with people.
Is it will be valid & legal if Section 8 Micro Finance Company does not consist of the word "Micro Finance"?
As we already discussed it does not important that the name consists of "Micro Finance" rather it is most important that the Memorandum of Association(MOA) must consist of Micro Finance Activity. That would be valid & legal.
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