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    Question

    Which of the following is NOT true about

    microfinance? i. Using SHG/JLG model loans of small amount of less than one lakh rupees are provided for income generating activities ii. These loans are mostly unsecured loans based on the guarantee of other group members iii. There is no cap on the interest rates an interest goes upto 35-40% per annum
    A 1) Only i Correct Answer Incorrect Answer
    B 2) Only i & ii Correct Answer Incorrect Answer
    C 3) Only i & iii Correct Answer Incorrect Answer
    D 4) Only iii Correct Answer Incorrect Answer
    E 5) All of the above statements are correct Correct Answer Incorrect Answer

    Solution

    Interest rates in microfinance mostly range around 22-26%. The rate is arrived at by calculating their cost of funds plus a maximum 10% margin or the average base rate of the five largest commercial banks by assets multiplied by 2.75 times, whichever is lower.

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