Which one of the following is NOT a basic principle of Micro Finance Institutions in India?

The correct answer is Large amounts of loans.

Key Points

• A large amount of loan is not a basic principle of micro-financial institutions in India.
• The functions of Microfinance institutions are:
  • Maintain macroeconomic stability.
  • Avoid interest-rate caps.
  • Refrain from distorting the market with unsustainable subsidized.
  • High-delinquency loan programs.

Additional Information

• MFIs are financial companies that provide small loans to people who do not have any access to banking facilities. 
• The definition of “small loans” varies between countries. In India, all loans that are below Rs. 1 lakh can be considered as microloans.
• Various types of institutions offer microfinance: 
  • ​Credit unions.
  • Commercial banks.
  • NGOs (Non-governmental Organizations).
  • Cooperatives, and sectors of government banks.
• The emergence of “for-profit” MFIs is growing. In India, these 'for-profit' MFIs are referred to as Non-Banking Financial Companies (NBFC).