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    Question

    A loan is considered as a microfinance loan when certain

    features are met. Which of the following is NOT the correct feature of such a loan?  
    A It is given to low-income households with annual household income of up to Rs.2 lakh Correct Answer Incorrect Answer
    B It is collateral free Correct Answer Incorrect Answer
    C It has flexibility in repayment periodicity Correct Answer Incorrect Answer
    D The loan cannot be lien marked to deposit account of borrower Correct Answer Incorrect Answer
    E There is no prepayment penalty Correct Answer Incorrect Answer

    Solution

    A loan is considered as microfinance loans when it is:  

    • a collateral-free loan , irrespective of end use and mode of application/ processing/ disbursal (either through physical or digital channels), provided to low-income households, i.e., households having annual income up to ₹3,00,000 .    
    • For this purpose, the household shall mean an individual family unit, i.e., husband, wife and their unmarried children.  
    • To ensure collateral-free nature of the microfinance loan, the loan shall not be linked with a lien on the deposit account of the borrower.  
    • The REs shall have a board-approved policy to provide the flexibility of repayment periodicity on microfinance loans as per borrowers’ requirement.  
    • No pre-payment penalty on microfinance loans. Penalty, if any, for delayed payment shall be applied on the overdue amount only   

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