Microfinance Institutions – UPSC Prelims

Microfinance Institutions:
  • MFI is an organisation that offers financial services to low income populations.
  • These services include microloans, micro savings and microinsurance.
  • Microfinance sector has grown rapidly over the past few decades and currently it is serving around 102 million accounts (including banks and small finance banks) of the poor population of India.
  • Different types of financial services providers for poor people have emerged – Non-Government Organisations (NGOs), cooperatives, community-based development institutions like self-help groups and credit unions, commercial and state banks, insurance and credit card companies, telecommunications and wire services, post offices, and other points of sale – offering new possibilities.
  • NBFC-MFIs in India are regulated by the Non-Banking Financial Company -Micro Finance Institutions (Reserve Bank) Directions, 2011 of the Reserve Bank of India (RBI).
Previous Year Questions:
Q 1.) 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)
  1. Credit facilities
  2. Savings facilities
  3. Insurance facilities
  4. Fund Transfer facilities
Select the correct answer using the codes given below the lists:
(a) 1 only
(b) 1 and 4 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4
Ans: (d)