Relevance:
A study by PricewaterhouseCoopers (PwC) and Association of Microfinance Institutions of India says that Micro Finance Institutions (MFIs) to play leading role in India’s economic growth.
About Microfinance:
- It is a form of financial service which provides small loans and other financial services to poor and low-income households without access to banking services.
- Microloans, micro-savings, and micro-insurance are some of the services including microfinance.
- All loans below ₹ 1 lakh can be categorized as microloans in India.
- In India, a microfinance loan is described as a collateral-free loan issued to a household with an annual income of up to ₹3 lakhs.
- Malegam Committee (2011) helped establish microfinance as a legitimate asset class.
- Microfinance Delivery Model in India includes –
- Scheduled commercial banks lending both directly as well as through business correspondents (BCs) and self-help groups (SHGs).
- Cooperative banks.
- Non-banking financial companies (NBFCs).
- Insurance and credit card companies
- Telecommunications and wire services
- Post offices and other points of sale – offering new possibilities.
- Significance –
- Women’s empowerment by routing credit directly to women.
- Provision of credit to poor without need for collateral.
- Promote financial inclusion and Employment generation.
Microfinance is the provision of financial services to people of low-income groups. This includes both the consumers and the self-employed. The service/services rendered under microfinance is/are: (2011)
- Credit facilities
- Savings facilities
- Insurance facilities
- Fund Transfer facilities
Select the correct answer using the codes given below.
- 1 only
- 1 and 4 only
- 2 and 3 only
- 1, 2, 3 and 4
Reference: Economic Times
