Read the following passage and answer the questions based on the passage:
Microfinance institutions (MFIs) have become crucial agents for advancing financial inclusion in rural areas. Through extending small loans and savings accounts to people who don't have access to conventional banks, MFIs empower entrepreneurs -most often women - to initiate or scale up microenterprises. In most villages, these loans support poultry farming, handloom weaving, or tiny retailing outlets. MFIs go beyond credit by regularly offering financial education training, teaching borrowers to cope with cash flows and interest charges. Critics warn, however, that excessive interest rates and repayment pressure can result in over-indebtedness. To avoid such risks, some MFIs limit interest rates and spread repayment terms. Research indicates that when complemented by market linkages - such as guaranteed buyers for fruits and vegetables-microfinance can trigger sustainable economic growth and poverty reduction.
What is a key criticism of microfinance highlighted in the passage?
Show answer & explanation
Correct answer: C
Explanation
Critics point out that excessive interest rates and repayment pressure can lead to significant debt for borrowers.
To counter these risks, some MFIs have started limiting interest rates and extending repayment schedules.
While MFIs empower entrepreneurs (particularly women) and provide financial education, the financial strain on borrowers remains a primary concern for skeptics.
The highlighted option, "High interest and repayment pressure can cause debt," accurately reflects the criticism mentioned in the passage.