With reference to Self-Help Groups (SHGs), consider the following statements: 1. A typical SHG has 15-20 members, usually belonging to one neighbourhood. 2. Members can take small loans from the group itself, but the group does not charge any interest on these loans. 3. If the group is regular in savings, it becomes eligible for availing a loan from the bank. Which of the statements given above is/are correct?

Explanation The correct option is 1 and 3 only. Self-Help Groups (SHGs) are small, informal associations of people, typically from similar socio-economic backgrounds, who come together to solve common problems through mutual help and financial intermediation. They are a key instrument for poverty alleviation and financial inclusion in India. - Statement 1 is Correct: A typical SHG consists of 15-20 members, usually belonging to one neighbourhood, who meet and save regularly. This size is considered optimal for effective democratic functioning and peer monitoring. - Statement 2 is Incorrect: While members can take small loans from the group itself to meet their needs, the group does charge interest on these loans. The interest rate is decided by the group members and is typically lower than what informal moneylenders charge. The interest income helps grow the group's common fund. - Statement 3 is Correct: After a year or two, if the group is regular in savings, it becomes eligible for availing a loan from the bank. This is known as the SHG-Bank Linkage Programme. The loan is sanctioned in the name of the group to create self-employment opportunities for members. Key Takeaway: SHGs charge interest on internal loans to maintain financial discipline and grow their corpus. Bank loans are extended to the group (not individuals directly) based on the group's track record of regular savings.

With reference to Self-Help Groups (SHGs), consider the… - NCERT Class 10 Economics MCQ

NCERT Class 10 Economics — Chapter 3: Money and Credit

mcqmedium

With reference to Self-Help Groups (SHGs), consider the following statements:

A typical SHG has 15-20 members, usually belonging to one neighbourhood.
Members can take small loans from the group itself, but the group does not charge any interest on these loans.
If the group is regular in savings, it becomes eligible for availing a loan from the bank.

Which of the statements given above is/are correct?

NCERT textbook question

From NCERT Understanding Economic Development · Page 51

Options

A1, 2 and 3
B1 and 3 only
C2 only
D1 and 2 only

Did you get this right?

Solution

Explanation

The correct option is 1 and 3 only.

Self-Help Groups (SHGs) are small, informal associations of people, typically from similar socio-economic backgrounds, who come together to solve common problems through mutual help and financial intermediation. They are a key instrument for poverty alleviation and financial inclusion in India.

Statement 1 is Correct: A typical SHG consists of 15-20 members, usually belonging to one neighbourhood, who meet and save regularly. This size is considered optimal for effective democratic functioning and peer monitoring.
Statement 2 is Incorrect: While members can take small loans from the group itself to meet their needs, the group does charge interest on these loans. The interest rate is decided by the group members and is typically lower than what informal moneylenders charge. The interest income helps grow the group's common fund.
Statement 3 is Correct: After a year or two, if the group is regular in savings, it becomes eligible for availing a loan from the bank. This is known as the SHG-Bank Linkage Programme. The loan is sanctioned in the name of the group to create self-employment opportunities for members.

Key Takeaway:
SHGs charge interest on internal loans to maintain financial discipline and grow their corpus. Bank loans are extended to the group (not individuals directly) based on the group's track record of regular savings.

Your note

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