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2. ADVANTAGES:
• Simple requirements
• Low possibility of interference by
regulator
• Tax exemption for charitable
activities
• Have been permitted to act as agents
for micro insurance by IRDA
Society under Societies
Registration Act, 1860
3. Disadvantages:
• No system for equity investment or ownership
so unattractive for commercial investors
• Not permitted to accept deposits from
customers.
• Vulnerable to the use of ‘usurious interest
prevention Acts’ of various state governments
Society under Societies
Registration Act, 1860
4. ADVANTAGES:
• Simple requirements and low
possibility of interference by
regulator.
• Tax exemption for charitable activities
Trusts under Indian Trusts
Act, 1882
5. Disadvantages:
• No system for equity investment or
ownership so unattractive for commercial
investors
• Not permitted to accept deposits from
customers
• Vulnerable to the use of ‘usurious interest
prevention Acts’ of various state
governments.
Trusts under Indian Trusts Act,
1882
6. Advantages:
• Simple procedures and low regulator
interference
• Has several exemptions from
requirements of Companies Act
• Can take up the activity of microfinance
lending without the permission of RBI
• Can obtain income tax exemption
• Have been permitted to act as agents for
micro insurance by IRDA
Not for profit Companies under Section
25 of the Companies Act, 1956
7. Disadvantages:
• Not permitted to accept deposits
from customers
•
• Not attractive to commercial
investors as not permitted to
distribute dividend
Not for profit Companies under Section
25 of the Companies Act, 1956
8. • Advantages:
• As they are regulated by RBI, investor
confidence tends to be high
• Attractive for investors as exit options are
possible Disadvantages
• Minimum capital requirements of Rs.20 million
• Not permitted to raise deposits unless they
complete 2 years and obtain investment grade
rating; the latter condition is difficult to fulfil
for MFIs
Non-banking finance companies
9. Advantages:
• Simple procedures
• Can accept deposits
• Can raise equity from members
Disadvantages
CO-OPERATIVES UNDER
VARIOUS STATE ACTS
10. Advantages:
• Can be formed with 3000 members and capital of
Rs.1,00,000
• Can accept member deposits
Disadvantages
• Licenses no longer being given due to past
problems with UCBs
• Dual regulation
Urban Cooperative Banks
11. Disadvantages:
• Lack of regulation makes it difficult to
attract funds
• No tax exemption
Urban cooperative banks
