Which one of the following is NOT a basic principle of Micro Finance Institutions in India?
- A.Lack of physical collateral
- B.Peer monitoring
- C.Focus on women borrowers
- D.Large amounts of loan
Correct answer
Explanation
The correct answer is D, Large amounts of loan. Microfinance means small loans to poor households that banks treat as too risky, so a large loan is the opposite of the idea. The Reserve Bank defines a microfinance loan as a collateral-free loan given to a household below a set annual income, and the whole model rests on small, frequent repayments rather than big sums. Option A is a real principle, because the borrower has no land or gold to pledge and the group's promise takes the place of security. Option B is a real principle: members of a joint liability group watch each other's repayment, and this peer pressure is why recovery rates stay high. Option C is a real principle, since self-help groups are built mainly around women, who save and repay more regularly and spend more on the family. NABARD's SHG-Bank Linkage Programme of 1992 carried this model across India. Exam tip: microfinance — small, collateral-free, group-guaranteed loans, mostly to women.
Practice Questions
View allWhich of the following is/are credit rating agency/agencies in India?
- A.CRISIL
- B.CARE
- C.ICRA
- D.All of the above
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CRISIL, CARE and ICRA are all credit rating agencies registered with SEBI, which regulates such agencies under its Credit Rating Agencies Regulations of 1999.
Read the full explanation →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.
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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IPPB was incorporated as a public limited company, but its two pilot branches opened at Raipur and Ranchi, not at Hyderabad and Varanasi.
Read the full explanation →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 ?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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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.
Read the full explanation →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 ?
- A.1 and 4
- B.1, 2 and 3
- C.4 only
- D.2, 3 and 4
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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.
Read the full explanation →Which of the following is not included in the assets of a commercial bank in India?
- A.Advances
- B.Deposits
- C.Investments
- D.Money at call and short notice
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Deposits are money the bank owes to its customers, so they sit on the liabilities side of its balance sheet.
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