Current Affairs · Banking and Finance Regulations
Consider the following statements regarding Microfinance Institutions (MFIs) in India: Statement I: The Reserve Bank of India (RBI) has set a regulatory cap of ₹2 lakh on household borrowing and a limit on the number of lenders to prevent over-leverage in the microfinance sector. Statement II: These regulatory guardrails were introduced to reduce systemic risks, ensure responsible lending, and improve household credit discipline. Which one of the following is correct in respect of the above statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both Statement I and Statement II are correct, and Statement II is the correct explanation for Statement I.✓
- 2Both Statement I and Statement II are correct, but Statement II is not the correct explanation for Statement I.
- 3Statement I is correct, but Statement II is incorrect.
- 4Statement I is incorrect, but Statement II is correct.
Correct answer
Both Statement I and Statement II are correct, and Statement II is the correct explanation for Statement I.
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