With reference to the functioning of SHGs, consider the following statements: 1. Banks are willing to lend to SHGs once they have a track record of savings. 2. Non-repayment by a member is ignored by the group. 3. Regular meetings of the group provide a platform to discuss social issues. Which of the statements given above is/are correct?

Correct Option The correct option is 1 and 3 only. Explanation Self-Help Groups (SHGs) are informal associations of people who choose to come together to find ways to improve their living conditions. They function on the principles of thrift, credit, and mutual help, serving as a key instrument for financial inclusion and social empowerment in rural India. Statement-wise Analysis - Statement 1 is Correct: The SHG-Bank Linkage Programme (SBLP) operates on the premise that SHGs must demonstrate financial discipline before accessing formal credit. Banks are willing to lend to SHGs only after they have established a consistent track record of regular savings and internal lending (inter-loaning) for a specified period (usually six months). - Statement 2 is Incorrect: The fundamental mechanism ensuring repayment in SHGs is "peer pressure." Since loans are often collateral-free and based on mutual trust, the group is collectively responsible for repayment. Non-repayment by a member is taken very seriously and is not ignored, as it jeopardizes the group's creditworthiness and ability to secure future loans from banks. - Statement 3 is Correct: Beyond financial intermediation, SHGs serve as vital platforms for social mobilization. Regular meetings provide an opportunity for members to discuss and act on various social issues such as health, nutrition, domestic violence, sanitation, and education, thereby fostering social capital. Key Takeaway Key Takeaway: SHGs function on the twin pillars of financial discipline (savings-led credit) and social capital (peer monitoring and collective action). Peer pressure acts as the substitute for physical collateral in the SHG banking model.

With reference to the functioning of SHGs,… - NCERT Class 10 Economics MCQ

NCERT Class 10 Economics — Chapter 3: Money and Credit

mcqmedium

With reference to the functioning of SHGs, consider the following statements:

Banks are willing to lend to SHGs once they have a track record of savings.
Non-repayment by a member is ignored by the group.
Regular meetings of the group provide a platform to discuss social issues.

Which of the statements given above is/are correct?

NCERT textbook question

From NCERT Understanding Economic Development · Page 51

Options

A1 and 2 only
B2 only
C1, 2 and 3
D1 and 3 only

Did you get this right?

Solution

Correct Option

The correct option is 1 and 3 only.

Explanation

Self-Help Groups (SHGs) are informal associations of people who choose to come together to find ways to improve their living conditions. They function on the principles of thrift, credit, and mutual help, serving as a key instrument for financial inclusion and social empowerment in rural India.

Statement-wise Analysis

Statement 1 is Correct: The SHG-Bank Linkage Programme (SBLP) operates on the premise that SHGs must demonstrate financial discipline before accessing formal credit. Banks are willing to lend to SHGs only after they have established a consistent track record of regular savings and internal lending (inter-loaning) for a specified period (usually six months).
Statement 2 is Incorrect: The fundamental mechanism ensuring repayment in SHGs is "peer pressure." Since loans are often collateral-free and based on mutual trust, the group is collectively responsible for repayment. Non-repayment by a member is taken very seriously and is not ignored, as it jeopardizes the group's creditworthiness and ability to secure future loans from banks.
Statement 3 is Correct: Beyond financial intermediation, SHGs serve as vital platforms for social mobilization. Regular meetings provide an opportunity for members to discuss and act on various social issues such as health, nutrition, domestic violence, sanitation, and education, thereby fostering social capital.

Key Takeaway

Key Takeaway: SHGs function on the twin pillars of financial discipline (savings-led credit) and social capital (peer monitoring and collective action). Peer pressure acts as the substitute for physical collateral in the SHG banking model.

Your note

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