Microfinance institution provides financial services to ______ individuals.

The correct answer is low income.

Key Points

• Microfinance:
  • Microfinance institution provides financial services to low - income individuals.
  • Microfinance is a basis of financial services for entrepreneurs and small businesses deficient in contact with banking and associated services.
  • The two key systems for the release of financial services to such customers include ‘relationship-based banking’ for individual entrepreneurs and small businesses along with ‘group-based models’  where several entrepreneurs come together to apply for loans and other services as a group.
  • Similar to banking operation traditions, microfinance entities are supposed to charge their lender’s interest on loans.
  • In most cases the so-called interest rates are lower than those charged by normal banks, certain rivals of this concept accuse microfinance entities of creating gain by manipulating the poor people’s money. 
  • This includes both the consumers and the self-employed.
  • Microfinance apart from microcredit, the provision of small loans to poor clients also covers many other services.
  • Micro Finance covers a wide range of services like credit facilities, saving facilities, insurance facilities, remittance, Short duration loans, Fund Transfer and also non-financial services like training, counseling, etc.
  • Microfinance Institutions (MFIs) in India exist as NGOs (registered as societies or trusts), Section 25 companies and Non-Banking Financial Companies (NBFCs).