How to Start Gold Loan Finance Company

Here is how to start gold loan finance company that will sufficiently fulfill the diverse financial needs of the populace. Inasmuch as you have the will to become an entrepreneur in the banking industry and to have a certain control of your own financial life and overall freedom.

The activities in finance take place in financial systems at various scopes, thus the field can be roughly divided into personal, corporate, and public finance. In a financial system, assets are bought, sold, or traded as financial instruments, such as currencies, loans, bonds, shares, stocks, options, futures, etc.

Assets can also be banked, invested, and insured to maximize value and minimize loss. In practice, risks are always present in any financial action and entities.

By the side, savers and investors have money available which could earn interest or dividends if put to productive use. Individuals, companies and governments must obtain money from some external source, such as loans or credit, when they lack sufficient funds to operate.

Now, there are dozens of banks and non-banking finance companies (NBFCs) as well as countless unorganized lenders that are actively engaged in providing gold loans. In towns and rural areas of India there is a huge demand for these loans. This has increased the number of specialized gold loan companies in the world.

Three basic Things to Look Out for When Starting this Finance Company

  • A gold loan business requires a considerable amount of investment. Based on the type of business, the expenses vary significantly.
  • Setting up a gold loan company involves finding a location, purchasing equipment and hiring people.
  • The next important thing is to obtain a business license.

Starting the Gold Loan Finance Company

Gold loan companies can earn strong profit margins. In towns and villages, gold loan companies mostly carry out their business through a handful of franchises and brokers.

This saves establishment cost, overhead cost and staff cost. So, gold loan businesses have an added benefit of low operational costs. Hence, teaching you some of the steps to take about how to start the gold loan finance company shall be delineated in the highlights below:

  • Gather the Needed Documents

Nidhi Company registration procedure is completely online and hence, all the required documents are uploaded to the scan form. Further, it is recommended to submit all required documents to avoid rejection. Here is the list of documents required for Nidhi Company registration:

  1. PAN card
  2. ID Proof
  3. Bank statement, mobile bill, elect bill, landline bill
  4. Ownership proof/rent agreement
  5. Electricity bill
  6. Copy of No objection certificate

The above documents should be collected for each of the initial promoters and should be kept in the scan form.

  • Get Company Identity Approval

Once the documentation is completed, the next step is to apply for the name approval of the company. Name approval is the important thing because it is the name that describes your company and ultimately becomes your brand and hence, follows the below guidelines for finalizing your company name:

The name should be unique and should not match with any existing company name. Check on this link

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Your proposed name should be not be copied from any registered brand name. Hence, do a proper trademark search under class 36 before finalizing the name.

Your name should not be too general like India Nidhi Limited, Money Nidhi Limited, and Best Nidhi Limited etc.

The name of the company should be in the following format:

Brand (Prefix) +Nidhi (Suffix) +Limited
Once your chosen name is approved, the ROC will issue a name approval letter.

  • Incorporate Company

After getting the name approval letter, the next step is to file for company registration with the MCA. This is the last step in the incorporation process but takes a lot of time, as many new documents are drafted, signed and submitted to the Registrar of Companies (ROC). If all the documents are found to be ok, then the ROC will issue the Certificate of Registration for company along with PAN and TAN of the Company.

  • Open the Bank Account

After you got the company registration, now you are all set to start your gold loan business. However, before starting up, you need to setup some things right, so that you can scale on the company operations and gold loans:

  • Open the bank account: Open the bank account with the bank of your choice. You will need the following documents to open the bank account so keep them ready:
    • MOA
    • AOA
    • Certificate of Incorporation
    • Director Pan and ID proof
    • Board resolution
  • Deposit initial capital: Once the bank account is opened, deposit the acceptable capital amount into the bank account to start giving a gold loan to the general public.
  • Print Membership, Loan and deposit forms: To engage customers and complete basic KYC, you will need a loan, deposit form and loan agreement with some other basic stationery.

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