Consider the following statements regarding the 'Self-Help Groups' (SHGs): 1. They are the building blocks of the organisation of the rural poor. 2. They increase the financial dependence of women on moneylenders. 3. They encourage members to save small amounts regularly. Which of the statements given above is/are correct?

The correct option is 1 and 3 only. Explanation Self-Help Groups (SHGs) are voluntary associations of the poor, primarily women, formed to address common socio-economic needs through mutual support and financial intermediation. They are central to India's strategy for financial inclusion and poverty alleviation, supported by frameworks like the Deendayal Antyodaya Yojana-National Rural Livelihood Mission (DAY-NRLM) and NABARD. Statement-wise Analysis: - Statement 1 is Correct: SHGs are recognized as the building blocks of the organization of the rural poor. They provide an institutional platform for the poor to organize, build social capital, and access financial and livelihood resources collectively. - Statement 2 is Incorrect: One of the primary objectives of SHGs is to liberate the rural poor from the clutches of informal moneylenders who charge exorbitant interest rates. By pooling savings and facilitating access to formal banking channels (SHG-Bank Linkage), SHGs decrease financial dependence on moneylenders. - Statement 3 is Correct: The fundamental operating principle of an SHG is "thrift and credit." Members are encouraged to save small amounts regularly to build a common corpus. This pooled capital is used to provide collateral-free loans to members for emergency or livelihood needs. Key Takeaway: Self-Help Groups foster financial discipline through regular savings and provide affordable credit, thereby reducing the reliance of the rural poor on exploitative informal debt sources.

NCERT Class 10 Economics — Chapter 3: Money and Credit

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Consider the following statements regarding the 'Self-Help Groups' (SHGs):

They are the building blocks of the organisation of the rural poor.
They increase the financial dependence of women on moneylenders.
They encourage members to save small amounts regularly.

Which of the statements given above is/are correct?

Official previous-year question

Verified 1 Aug 2026.

Options

A1 and 3 only
B1, 2 and 3
C1 and 2 only
D2 only

Did you get this right?

Solution

The correct option is 1 and 3 only.

Explanation

Self-Help Groups (SHGs) are voluntary associations of the poor, primarily women, formed to address common socio-economic needs through mutual support and financial intermediation. They are central to India's strategy for financial inclusion and poverty alleviation, supported by frameworks like the Deendayal Antyodaya Yojana-National Rural Livelihood Mission (DAY-NRLM) and NABARD.

Statement-wise Analysis:

Statement 1 is Correct: SHGs are recognized as the building blocks of the organization of the rural poor. They provide an institutional platform for the poor to organize, build social capital, and access financial and livelihood resources collectively.
Statement 2 is Incorrect: One of the primary objectives of SHGs is to liberate the rural poor from the clutches of informal moneylenders who charge exorbitant interest rates. By pooling savings and facilitating access to formal banking channels (SHG-Bank Linkage), SHGs decrease financial dependence on moneylenders.
Statement 3 is Correct: The fundamental operating principle of an SHG is "thrift and credit." Members are encouraged to save small amounts regularly to build a common corpus. This pooled capital is used to provide collateral-free loans to members for emergency or livelihood needs.

Key Takeaway:
Self-Help Groups foster financial discipline through regular savings and provide affordable credit, thereby reducing the reliance of the rural poor on exploitative informal debt sources.

Your note

More from Chapter 3: Money and Credit

Consider the following statements regarding the impact of high cost of borrowing: 1. A larger part of the earnings of the borrowers is used to repay the loan. 2. The repayment amount is always less than the income of the borrower. 3. It may discourage people from starting enterprises due to the debt burden. Which of the statements given above is/are correct?

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Consider the following statements regarding the 'Cheque' facility: 1. The payee instructs the bank to withdraw money from the payer's account. 2. It allows for the direct settlement of payments without the use of cash. 3. Cheques are a form of currency issued by the RBI. Which of the statements given above is/are correct?

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With reference to the credit needs in rural areas, consider the following statements: 1. The main demand for credit is for crop production. 2. There is no time gap between buying inputs and selling the crop. 3. Repayment of the loan is crucially dependent on the income from farming. Which of the statements given above is/are correct?

medium

Consider the following statements regarding the 'Krishak Cooperative': 1. It does not accept deposits from its members. 2. It uses deposits as collateral to obtain a large loan from the bank. 3. It provides loans for various purposes including house construction. Which of the statements given above is/are correct?

medium

Consider the following statements regarding the supervision of credit activities in India: 1. The World Bank supervises the functioning of formal sources of loans. 2. There is no organisation that supervises the credit activities of lenders in the informal sector. 3. Banks are not required to share any lending information with the RBI. Which of the statements given above is/are correct?

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Keep practising Chapter 3: Money and Credit

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The correct option is 1 and 3 only.

Explanation

Statement-wise Analysis:

Statement 1 is Correct: SHGs are recognized as the building blocks of the organization of the rural poor. They provide an institutional platform for the poor to organize, build social capital, and access financial and livelihood resources collectively.
Statement 2 is Incorrect: One of the primary objectives of SHGs is to liberate the rural poor from the clutches of informal moneylenders who charge exorbitant interest rates. By pooling savings and facilitating access to formal banking channels (SHG-Bank Linkage), SHGs decrease financial dependence on moneylenders.
Statement 3 is Correct: The fundamental operating principle of an SHG is "thrift and credit." Members are encouraged to save small amounts regularly to build a common corpus. This pooled capital is used to provide collateral-free loans to members for emergency or livelihood needs.