Which services are typically provided by Microfinance Institutions (MFIs) ?
- Microloans
- Investment banking
- Microsavings
- Corporate bonds
Aiii, iv
Bi, iii
CAll
Diii only
Answer:
B. i, iii
Read Explanation:
Microfinance Institutions (MFIs)
- Microfinance Institutions (MFIs) are financial institutions that provide financial services such as small loans, microsavings, and microinsurance to individuals who do not have access to traditional banking services.
- These institutions play a vital role in promoting financial inclusion and empowering underserved communities, especially in rural areas.
- They often operate as non-bank financial institutions, offering essential financial services to individuals and small businesses that may not have access to formal banking systems.
- MFIs are regulated by the Reserve Bank of India (RBI) through its Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) Directions.
MFIs typically provide the following services:
Microloans:
- MFIs offer small loans to individuals or groups, especially those who lack access to traditional banking services.
- These loans are often used for income-generating activities or small businesses.
- It allows individuals to borrow small sums of money without providing any collateral In India, all loans that are below Rs.1 lakh can be considered as microloans
Microsavings:
- MFIs offer savings accounts to their clients, allowing them to save small amounts of money without the need for a minimum balance.
- This helps clients build financial resilience.
Microinsurance:
- Some MFIs provide insurance coverage to borrowers, offering protection against unexpected events such as illness, accidents, or crop failures.
- This helps clients mitigate risks and financial shocks.