Which one of the following statements about a borrower from a Microfin

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Which one of the following statements about a borrower from a Microfinance Company is not correct ?

The borrower should not have annual income beyond a limit.
The borrower should not seek loan amount beyond a limit.
The borrower should not refuse to offer a collateral.
The borrower should not refuse to pay any rate of interest offered.
This question was previously asked in
UPSC CDS-2 – 2022
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Microfinance aims to provide financial services to low-income individuals or groups who typically lack access to traditional banking and collateral. A key characteristic of microfinance lending is that it does not require borrowers to provide physical collateral. Loans are often granted based on group guarantee and social collateral. Therefore, the statement “The borrower should not refuse to offer a collateral” is incorrect because microfinance models are specifically designed to lend *without* requiring collateral from the borrower.
Microfinance typically serves low-income individuals and does not require traditional collateral from borrowers.
Microfinance operations are regulated in India, and there are guidelines regarding the annual income limit for borrowers, the maximum loan amount, and responsible lending practices, including terms like interest rates.

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