As per Reserve Bank of India’s master direction, a microfinance loan is defined as a collateral-free loan given to a household having annual household income up to _____________.

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SSC JE Civil 10 Oct 2023 Shift 1 Official Paper-I
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  1. Rs. 4,00,000
  2. Rs. 2,00,000
  3. Rs. 3,00,000 
  4. Rs. 5,00,000

Answer (Detailed Solution Below)

Option 3 : Rs. 3,00,000 
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The correct answer is Rs. 3,00,000.

Key Points

  • According to the Reserve Bank of India, a microfinance loan is defined as a collateral-free loan given to a household having an annual household income up to ₹3 lakh.
  • The microfinance industry’s gross loan portfolio has shown an increase of 23.5% on a yearly basis to ₹2.93 lakh crore as of June 30, 2022, from ₹2.37 lakh crore last year.
  • Among states, Tamil Nadu is the largest state in terms of gross loan portfolio followed by Bihar and West Bengal.

Additional Information 

  • The microfinance industry began in India in the 1980s taking inspiration from Bangladesh.
  • The loan growth story among credit providers has been healthy in the last year.
  • The portfolio outstanding at NBFCs grew highest at 38.4%, microfinance NBFCs at 36.6%, small finance banks at 28.5% and banks at 9.9% during the period.
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