Microfinance is the provision of financial services to people of low-income groups. This includes both the consumers and the self-employed. The service/services rendered under microfinance is/are:
- 1.Credit facilities
- 2.Savings facilities
- 3.Insurance facilities
- 4.Fund Transfer facilities
Select the correct answer using the codes given below the lists:
Answer & explanation
Answer: (d) 1, 2, 3 and 4
Microfinance is a package of financial services for low-income clients, not just small loans. It covers credit, savings, insurance and money-transfer services, so all four listed facilities are part of it.
- ✓ 1. Credit (microcredit) is the best-known microfinance service: small loans to low-income people who lack access to regular bank lending.
- ✓ 2. Savings are a core microfinance service. Small deposit facilities let poor households keep money safe for emergencies and future needs.
- ✓ 3. Insurance (microinsurance) is part of microfinance. It helps low-income households cope with risks such as illness or loss of assets.
- ✓ 4. Transfer services, such as sending money to family elsewhere, are part of microfinance. The UN's International Year of Microcredit 2005 named 'transfer remittances' alongside credit, savings and insurance as services poor households should be able to access.
Remember · Microfinance is more than microcredit: it includes loans, savings, insurance and transfer or remittance services for low-income clients. Microcredit is only one part.
Sources
- UN International Year of Microcredit 2005 – brochure ↗ · reference work “Microfinance refers to loans, savings, insurance, transfer services and other financial products targeted at low-income clients.”
- UN Information Service, Vienna – launch of the International Year of Microcredit 2005 ↗ · reference work “provide greater access to credit, savings, insurance, transfer remittances and other financial services for poor and low-income households in order to move towards more secure livelihoods and prosperous futures.”
Question: UPSC Civil Services (Preliminary) 2011, General Studies Paper I. Explanation: Minimalist IAS, checked 25 Oct 2026 (how we verify). ·
