UPSC Prelims 2011 · Question 63 of 100
UPSC Prelims 2011 question on Microfinance Services
- ExamUPSC CSE
- Year2011
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicBanking
- DifficultyMedium
- TypeStatement
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 micro-finance is/are:
1. Credit facilities
2. Savings facilities
3. Insurance facilities
4. Fund Transfer facilities
Select the correct answer using the codes given below the lists:
Show answer
Answer: D. 1, 2, 3 and 4
Verdict
Correct Answer: 1, 2, 3 and 4
Analysis
Microfinance means providing small-scale financial services to low-income groups who are usually excluded from formal banking.
Statement by statement
1. Credit — Correct
Microfinance provides small loans to poor and low-income households.
These loans are often collateral-free and are used for income generation, small businesses or livelihood activities.
2. Savings — Correct
Microfinance also includes savings services.
These help low-income households build financial security and manage future needs.
3. Insurance — Correct
Microfinance may include low-cost insurance products.
These protect poor households from risks such as illness, crop failure, accidents or loss of livelihood.
4. Fund Transfer — Correct
Microfinance also includes fund transfer and remittance services.
This helps low-income groups safely send and receive money, especially migrant workers and rural households.
Extra UPSC info
* Microfinance promotes financial inclusion among low-income and underserved groups.
* It is generally provided through Self-Help Groups, Microfinance Institutions and NBFC-MFIs.
* NABARD launched the SHG-Bank Linkage Programme in 1992.
* RBI regulates NBFC-MFIs in India.
* Microfinance loans are usually collateral-free.
* Pradhan Mantri Mudra Yojana provides loans up to Rs 10 lakh to micro and small enterprises.
How to crack it
Microfinance is not limited to credit; it includes credit, savings, insurance and fund transfer services for low-income groups.