Microfinance Quiz

Microfinance mainly targets:

• Large corporates

• Government enterprises

• Low-income households

• Exporters

Answer explanation

Microfinance primarily aims to provide financial services to low-income households, helping them access credit and improve their economic situation, unlike large corporates or government enterprises.

The primary purpose of microfinance is to:

• Increase stock market investment

• Provide collateral-free financial services

• Manage inflation

• Finance infrastructure projects

Answer explanation

The primary purpose of microfinance is to provide collateral-free financial services, enabling individuals, especially in low-income communities, to access credit and improve their economic situation without the need for traditional collateral.

Which is NOT a feature of microfinance?

• Small loan size

• Collateral-free lending

• High-income clientele

• Focus on poor households

Answer explanation

Microfinance primarily targets low-income individuals and poor households, providing small loans and collateral-free lending. High-income clientele do not align with its core mission, making this the correct choice.

Microfinance typically includes:

• Microcredit, savings, insurance, remittances

• Venture capital

• Foreign exchange services

• Merchant banking

Answer explanation

Microfinance typically includes services like microcredit, savings, insurance, and remittances, which aim to provide financial support to low-income individuals. Venture capital, foreign exchange services, and merchant banking are not part of microfinance.

Which of the following is an example of an MFI?

• Grameen Bank

• Reserve Bank of India

• World Bank

• IMF

Answer explanation

Grameen Bank is a well-known microfinance institution (MFI) that provides small loans to the impoverished without requiring collateral. The other options, like the Reserve Bank of India, World Bank, and IMF, are not MFIs.

A major role of microfinance is:

• Financing corporate mergers

• Promoting financial inclusion

• Stabilizing exchange rates

• Controlling inflation

Answer explanation

Microfinance primarily aims to promote financial inclusion by providing access to financial services for underserved populations, enabling them to improve their economic situation.

Which of the following is a benefit of microfinance?

• Poverty reduction

• Women empowerment

• Self-employment opportunities

• All of the above

Answer explanation

Microfinance provides various benefits, including poverty reduction by increasing access to financial services, empowering women through entrepreneurship, and creating self-employment opportunities. Thus, 'All of the above' is correct.

Microfinance helps in:

• Encouraging dependency

• Building entrepreneurship

• Reducing rural development

• None of the above

Answer explanation

Microfinance primarily aims to build entrepreneurship by providing financial services to those who lack access to traditional banking. This empowers individuals to start and grow their own businesses, fostering economic development.

Which sector is most positively impacted by microfinance?

• Agriculture and rural economy

• Defense

• Luxury goods market

• Aviation

Answer explanation

Microfinance primarily supports small-scale farmers and rural entrepreneurs by providing them access to credit, which enhances productivity and income in the agriculture and rural economy sector, making it the most positively impacted.

Which one is a social benefit of microfinance?

• Increasing imports

• Promoting gender equality

• Boosting speculative investment

• Enhancing fiscal deficit

Answer explanation

Microfinance promotes gender equality by providing women access to financial resources, enabling them to start businesses and improve their economic status, which contributes to social empowerment and community development.