Micro Finance Institutions
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Indian Economy and Indian Financial System — JAIIB.
One-liners from this chapter
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What is the primary objective of Microfinance Institutions (MFIs) in India?
MFIs aim to provide financial services such as small loans, savings, insurance, and remittances to low-income households and the unbanked poor who lack access to formal banking channels.
What is the full form of NBFC-MFI as classified by the Reserve Bank of India?
Non-Banking Financial Company – Microfinance Institution
Which regulatory body governs Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) in India?
The Reserve Bank of India (RBI) regulates NBFC-MFIs under the Non-Banking Financial Company directions and specific MFI guidelines issued from time to time.
What percentage of total assets must an NBFC-MFI maintain as qualifying assets?
At least 85% of its net assets must be qualifying assets
What is the minimum net owned fund (NOF) requirement for an NBFC-MFI to operate in India?
As per RBI guidelines, an NBFC-MFI must maintain a minimum Net Owned Fund of Rs. 5 crore (Rs. 2 crore for MFIs in the North-East region).
What is the maximum household annual income for rural borrowers under the RBI microfinance framework?
Rs. 1,25,000 per annum for rural households
What is the income ceiling for a borrower to be eligible for a microfinance loan under RBI's harmonised framework?
A household with an annual income up to Rs. 3,00,000 (rural or urban/semi-urban) is eligible for microfinance loans under the RBI's revised harmonised framework effective from April 2022.
What is the maximum household annual income for urban and semi-urban borrowers eligible for microfinance?
Rs. 2,00,000 per annum for urban and semi-urban households
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