Explanation:

- Microfinance institutions often have specific criteria to identify eligible borrowers, especially in rural areas, focusing on low-income households that require small loans for various purposes like agriculture, small business, or personal needs.

- Typically, the upper limit of annual household income for microfinance borrowers in rural areas is set to ensure these services are targeted towards those in genuine need.

- Option: 1 (Rs 1.5 lakh) - This option is frequently used as a threshold by several microfinance institutions for defining the maximum eligible income for rural borrowers.

- Option: 2 (Rs 1 lakh) - While plausible, this is generally on the lower side compared to typical standards.

- Option: 3 (Rs 1.25 lakh) - This option is within the range, but slightly lower than the more commonly used limit.

- Option: 4 (Rs 2 lakh) - This is higher than typical for rural microfinance, more commonly used in urban settings.

- Correct Answer: Option 1 (Rs 1.5 lakh) - This option aligns with common practices in the microfinance sector for rural households.