ECONOMICS
TECHNOLOGY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Micro-credit schemes may become a substitute for urgently needed government anti-poverty policies.
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Micro-credit schemes contribute to the growth of the informal sector.
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Some extremely poor and highly unskilled people may be harmed by micro-credit.
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Interest rates in micro-credit schemes are too low.
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Detailed explanation-1: -There are some cons regarding microcredit, including too much pressure to repay loans, a large suicide rate among borrowers, and severe debt levels. A contributing factor to the disadvantages is the high interest rates on some microcredit loans – rates can be 30% or even higher.
Detailed explanation-2: -Microfinance provides only small amount of loan compared to other financial institutions such as banks. It charges high amount of interest for certain amount of loans and is calculated based on duration not per annum if less than 12 months. It provides only short term loan facility.
Detailed explanation-3: -Rate of Interest: 24.25% to 25.50% per annum on a reducing balance method governed by the Marginal Cost of Funds based Lending Rate MCLR-based pricing policy of the bank. Processing Fee: 2% of the loan amount (excluding applicable GST)
Detailed explanation-4: -It helps the households to work efficiently and effectively at large. It also helps these households to alleviate poverty. It allows the businessmen to run their companies and upscale their businesses at the same time. It provides the opportunity for the firm to get immediate resources for keeping their business on.
Detailed explanation-5: -Collateral-free loans. Disburse quick loan under urgency. Help people to meet their financial needs. Provide an extensive portfolio of loans. Promote self-sufficiency and entrepreneurship. Harsh repayment criteria. Small Loan amount. High-interest rate.