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Banking & Financial AwarenessEasyAsked in: SSC MTS · 13 Sept, 2023, Shift 3

Which of the following is a feature of Micro Finance Institutions?

  1. A.Financial service to government employees
  2. B.Finance service to Union ministers
  3. C.Financial service to corporate
  4. D.Financial service to disadvantaged people

Correct answer

D. Financial service to disadvantaged people

Explanation

The correct answer is D, Financial service to disadvantaged people. A microfinance institution exists to lend small sums to poor and low-income people who cannot offer the security an ordinary bank asks for. It gives tiny loans, takes small savings and sells simple insurance, usually working through self-help groups or joint liability groups in which the members stand guarantee for one another, so no collateral is needed. The loans are small, are repaid weekly or monthly, and are often used for a small shop, a sewing machine, cattle or seed. In India these bodies are registered with the Reserve Bank of India as NBFC-MFIs, and NABARD's SHG-Bank Linkage programme works on the same idea. A and B are wrong because government employees and Union ministers draw regular salaries and can borrow from ordinary banks. C is wrong because corporate borrowers are served by commercial banks and the capital market. Exam tip: microfinance means small collateral-free loans to the poor, through SHGs and NBFC-MFIs under the RBI.

Practice Questions

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Q2.Banking & Financial AwarenessAsked in: CDS · CDS-I 2018, GKHard

Which of the following statements about the India Post Payments Bank (IPPB) is/are correct? 1. It has been incorporated as a Public Limited Company. 2. It started its operation by establishing two pilot branches at Hyderabad and Varanasi. Select the correct answer using the code given below.

  1. A.1 only
  2. B.2 only
  3. C.Both 1 and 2
  4. D.Neither 1 nor 2
Show answer
Correct answer: A. 1 only

IPPB was incorporated as a public limited company, but its two pilot branches opened at Raipur and Ranchi, not at Hyderabad and Varanasi.

Q3.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2017, GS Paper IEasy

Consider the following statements : 1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country. 2. NPCI has launched RuPay, a card payment scheme. Which of the statements given above is/are correct ?

  1. A.1 only
  2. B.2 only
  3. C.Both 1 and 2
  4. D.Neither 1 nor 2
Show answer
Correct answer: C. Both 1 and 2

The National Payments Corporation of India was set up in 2008 as the umbrella body for retail payments in the country, on the initiative of the Reserve Bank of India and the Indian Banks' Association, under the Payment and Settlement Systems Act, 2007.

Q4.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2026, GS Paper IHard

Consider the following statements about the Non-Banking Financial Companies (NBFCs) in India : 1. NBFCs cannot accept demand deposits. 2. All the NBFCs operating in India have to be registered with the RBI. 3. NBFCs form part of the payment and settlement system and can issue cheque drawn on itself. 4. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of deposit taking NBFCs. Which of the statements given above is/are correct ?

  1. A.1 and 4
  2. B.1, 2 and 3
  3. C.4 only
  4. D.2, 3 and 4
Show answer
Correct answer: A. 1 and 4

These are two of the three ways the RBI itself says an NBFC differs from a bank. An NBFC lends and invests like a bank, but it cannot accept demand deposits such as savings or current accounts, so statement 1 is correct.