Business of finance without being registered anywhere, due to this, they have to either close down their business or face the many people in India do the penal consequence of law. The main reason behind being unregistered is the cost and time involved in the registration.
In India, only banks and Non-Banking Financial Companies (NBFC) are allowed to do business of finance. Unlike Banks, NBFC requires lesser capital to start with but that too is large for a small business man. The minimum capital requirement for NBFC is Two crore. Other than capital, there are various other restrictions as well like stringent regulations, capital adequacy norms, Provisioning norms etc.