BANKING AFFAIRS

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

What is not an innovation likely to explain the high repayment rates of Micro Credit Programmes?

A	Promising larger and larger loans for borrowers in good standing
B	Public repayments
C	Strong competition between numerous Micro Credit Programmes to reduce interest rates
D	Starting repayments before investments are likely to have borne fruit

Explanation:

Detailed explanation-1: -The correct answer is Large amounts of loans. A large amount of loan is not a basic principle of micro-financial institutions in India.

Detailed explanation-2: -D) It is mainly aimed to reduce the unemployment and poverty of a Country. Correct Answer: C) It is the credit policy which does not cover the insurance of the borrower.

Detailed explanation-3: -Why are interest rates for MFIs higher than banks? The rate of interest levied by Microfinance Institutions (MFIs) are higher as compared to those levied by banks as it is more expensive to process smaller loans as compared to loans offered by traditional banks.

Detailed explanation-4: -According to the regression results, it was discovered that interest rate is negatively and significantly related to loan repayment (=-0.525, p=0.015). The changes in interest rates have a substantial influence on loan repayment; when the banks charge more, the repayment will be low.

There is 1 question to complete.