Question

Information
Question
Choose the correct answer based on the passage.
a
Which of the given statements is NOT a challenge
faced by microfinance in India?
OPTIONS
Does not help the poorest
Efficient when economy of scale is achieved
Non-conducive policy environment
Structural problems of Indian society​

Answer 1

Answer:

efficient when economy of scale is achieved

Answer 2

Answer:

The correct answer is option A

Explanation:

• One type of NBFC that serves the financial needs of the country's poorer citizens, primarily the rural population, is the Micro Finance Institution (MFI). Only the Reserve Bank of India has the authority to regulate this organization. The main goals of promoting and improving such institutions are to improve the lives of the less fortunate members of society and increase financial inclusion. Major Challenges Faced by Indian Microfinance Industry will be covered in this article.
• Over-indebtedness by such borrowers is a frequent and significant challenge this sector faces because it primarily deals with the poorer section of the society. Because they constantly need money, borrowers turn to all available sources of credit.

Similarly, there are many other serious challenges of this sector, and they can be summarized as:

• high rates of interest charged by lenders
• over-dependence on the banking system by the sector,
• Illiteracy and lack of awareness about the products by borrowers.
• Multiple borrowings and over-indebtedness etc.

Additionally, government regulators should establish precise guidelines for allowing MFIs to mobilize savings for further lending to the poor; doing so would grant these organizations a significant degree of financial independence. Each Indian state could think about setting up a multi-party working group to meet with microfinance executives and discuss how to improve the policy environment and dispel misconceptions.

Microfinance presents an opportunity to significantly reduce extreme poverty. We will gradually but surely change India in ways we can only now begin to imagine by releasing the entrepreneurial talent of the underprivileged.