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Which services are typically provided by Microfinance Institutions (MFIs) ?

  1. Microloans
  2. Investment banking
  3. Microsavings
  4. 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.

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