Which one of the following is NOT a basic principle of Micro Finance Institutions in India?

Question

Question

This question was previously asked in

RRB NTPC CBT 2 (Level-3) Official Paper (Held On: 17 June 2022 Shift 3)

Answer 1

The correct answer is Large amounts of loans.

Key Points

A large amount of loan is not a basic principle of micro-financial institutions in India.
The functions of Microfinance institutions are:
- Maintain macroeconomic stability.
- Avoid interest-rate caps.
- Refrain from distorting the market with unsustainable subsidized.
- High-delinquency loan programs.

Additional Information

MFIs are financial companies that provide small loans to people who do not have any access to banking facilities.
The definition of “small loans” varies between countries. In India, all loans that are below Rs. 1 lakh can be considered as microloans.
Various types of institutions offer microfinance:
- Credit unions.
- Commercial banks.
- NGOs (Non-governmental Organizations).
- Cooperatives, and sectors of government banks.
The emergence of “for-profit” MFIs is growing. In India, these 'for-profit' MFIs are referred to as Non-Banking Financial Companies (NBFC).