Correct option is D
Correct Answer: (d) By establishing partnerships with local non-governmental organisations (NGOs) for outreach
Explanation:
Microfinance Institutions (MFIs) contribute significantly to financial inclusion in remote rural areas by collaborating with local NGOs and self-help groups (SHGs) to extend their outreach. These partnerships help in identifying potential borrowers, providing financial literacy, and ensuring credit repayment. MFIs offer small loans, savings, insurance, and other financial services to low-income individuals and micro-entrepreneurs who do not have access to traditional banking services. Through joint-liability group models and SHGs, they create social trust and accountability, making credit accessible even in the most underserved regions.
Information Booster:
MFIs bridge the financial gap by serving individuals who lack access to formal banking, especially in rural areas.
They collaborate with NGOs and SHGs to enhance community-based financial inclusion and literacy.
Group-based lending models, such as Self-Help Groups (SHGs) and Joint Liability Groups (JLGs), reduce the risk of loan defaults.
MFIs provide small-ticket loans, often without collateral, enabling rural entrepreneurs and farmers to expand their businesses.
Microfinance encourages women empowerment, as many MFI loans are targeted toward women entrepreneurs, promoting self-employment.
MFIs offer financial literacy programs, helping rural populations manage loans, savings, and business finances effectively.
The Reserve Bank of India (RBI) regulates MFIs, ensuring fair lending practices and financial sustainability.
Explanation:
Microfinance Institutions (MFIs) contribute significantly to financial inclusion in remote rural areas by collaborating with local NGOs and self-help groups (SHGs) to extend their outreach. These partnerships help in identifying potential borrowers, providing financial literacy, and ensuring credit repayment. MFIs offer small loans, savings, insurance, and other financial services to low-income individuals and micro-entrepreneurs who do not have access to traditional banking services. Through joint-liability group models and SHGs, they create social trust and accountability, making credit accessible even in the most underserved regions.
Information Booster:
MFIs bridge the financial gap by serving individuals who lack access to formal banking, especially in rural areas.
They collaborate with NGOs and SHGs to enhance community-based financial inclusion and literacy.
Group-based lending models, such as Self-Help Groups (SHGs) and Joint Liability Groups (JLGs), reduce the risk of loan defaults.
MFIs provide small-ticket loans, often without collateral, enabling rural entrepreneurs and farmers to expand their businesses.
Microfinance encourages women empowerment, as many MFI loans are targeted toward women entrepreneurs, promoting self-employment.
MFIs offer financial literacy programs, helping rural populations manage loans, savings, and business finances effectively.
The Reserve Bank of India (RBI) regulates MFIs, ensuring fair lending practices and financial sustainability.
Additional Information:
- Relying solely on digital banking platforms – While digital banking enhances microfinance, MFIs use both physical and digital modes for financial inclusion, ensuring accessibility for people with limited technological literacy.
- Offering standardised loan products – Unlike traditional banks, MFIs offer customised financial products based on local needs, using flexible repayment structures suited for low-income groups.
- Focusing exclusively on urban micro-enterprises – MFIs primarily target rural and semi-urban populations.
English
100 Questions
100 Marks
90 Mins
