Question
Download Solution PDFIdentify the INCORRECT statement in the context of Microfinance Institutions in India.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is A microfinance loan should be linked with a lien on the deposit account of the borrower. Key Points
- A microfinance loan is a collateral-free loan, meaning that it does not require any lien on the borrower's deposit account.
- Microfinance institutions provide small loans to low-income households and individuals who do not have access to traditional banking services.
- The annual household income limit for microfinance loans in India is up to Rs. 3,00,000.
- Microfinance loans are collateral-free, meaning that they do not require any security or guarantor for the loan.
- Microfinance loans are given to households, which typically include the husband, wife, and their unmarried children.
Additional Information
- Microfinance institutions in India play a crucial role in providing financial services to the unbanked population and promoting financial inclusion.
- Microfinance loans are usually given for income-generating activities such as small businesses, agriculture, and livestock rearing.
- Microfinance institutions also provide other financial services such as savings accounts, insurance, and remittances.
- In recent years, microfinance institutions in India have faced challenges such as over-indebtedness, high interest rates, and aggressive loan recovery practices, leading to concerns about the welfare of borrowers.
Last updated on Jul 12, 2025
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