Reading Comprehension — quick quiz

Read the passage carefully and answer the question that follows: Microfinance institutions have emerged as a powerful tool for financial inclusion in rural India. By providing small loans without collateral, these institutions enable poor households to start small businesses, purchase livestock, or invest in their children's education. Unlike traditional banks that require extensive documentation and credit history, microfinance institutions operate on the principle of group lending, where members of a self-help group guarantee each other's loans. This peer pressure mechanism ensures high repayment rates, often exceeding 95 percent. However, critics argue that the high interest rates charged by some microfinance institutions, sometimes reaching 24 to 36 percent annually, can trap borrowers in a cycle of debt. Despite this concern, studies show that when used responsibly, microfinance has significantly improved the living standards of millions of rural families across India. Question: According to the passage, what is the primary reason for high repayment rates in microfinance institutions?