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    Question

    Which of the following is not a correct feature of a

    microfinance loan as per RBI’s directions?
    A It is collateral free Correct Answer Incorrect Answer
    B It is given to low-income households with annual household income of up to ₹2 lakh Correct Answer Incorrect Answer
    C The loan cannot be lien-marked to the borrower’s deposit account Correct Answer Incorrect Answer
    D It offers flexibility in repayment periodicity Correct Answer Incorrect Answer
    E There is no prepayment penalty Correct Answer Incorrect Answer

    Solution

    • As per the RBI’s Master Directions on Microfinance Loans (2022): o A microfinance loan must be collateral free. o Eligible borrowers are low-income households with annual household income of up to ₹3,00,000 (not ₹2,00,000). o The loan must not be lien-marked against the borrower’s deposit account. o Borrowers must be allowed flexibility in repayment periodicity (weekly, fortnightly, or monthly). o There is no prepayment penalty. Any penalty for delay applies only on the overdue amount.

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