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What is a dimension related to the sustainability of microfinance institutions in India?
Question

What is a dimension related to the sustainability of microfinance institutions in India?

A.

Dependency on donor funding

B.

Limited social impact

C.

High-profit margins

D.

Excessive interest rates

Correct option is A

The correct answer is (a) Dependency on donor funding.
 Dependency on donor funding refers to the reliance of microfinance institutions (MFIs) on external sources of funding, such as grants, subsidies, or concessional loans, to sustain their operations.
 While donor funding can initially help MFIs establish and expand their outreach, over-reliance on such funding may pose challenges to long-term sustainability.
 Microfinance Institutions (MFIs) in India are specialized financial institutions that provide financial services, such as small loans, savings accounts, insurance, and other basic financial products, to low-income individuals and underserved communities.
 One of the earliest organizations to engage in microfinance activities in India was the Self-Employed Women's Association (SEWA), founded in 1972 by Ela Bhatt.
 Notable milestones include the establishment of SKS Microfinance (now Bharat Financial Inclusion Limited) in 1997 and the formation of the Microfinance Institutions Network (MFIN) in 2009 to represent and promote the interests of the microfinance sector.

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