Question : Identify the incorrect statement in the context of Microfinance Institutions in India.
Option 1: A microfinance loan is given to a household having an annual household income of up to 3,00,000.
Option 2: A microfinance loan is a collateral-free loan.
Option 3: When giving a microloan, a household means an individual family unit, i.e., husband, wife, and their unmarried children.
Option 4: A microfinance loan should be linked with a lien on the deposit account of the borrower.
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Correct Answer: A microfinance loan should be linked with a lien on the deposit account of the borrower.
Solution : The correct option is A microfinance loan should be linked with a lien on the deposit account of the borrower.
Whether or not a microfinance loan is linked with a lien on the borrower's deposit account depends on the policies of the microfinance institution. In some cases, MFIs may require collateral or security for loans, and this could involve placing a lien on a borrower's deposit account or other assets.
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