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Consider the following statements About Self-Help Group (SHG) programme

Consider the following statements:

1. The Self-Help Group (SHG) programme was originally initiated by the State Bank of India by providing microcredit to the financially deprived.

2. In an SHG, all members of a group take responsibility for a loan that an individual member takes.

3. The Regional Rural Banks and Scheduled Commercial Banks support SHGs.

How many of the above statements are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Answer: B

The correct answer is (b). Only statements 2 and 3 are correct.

Statement 1 is incorrect because the SHG programme was not originally initiated by the State Bank of India. It was actually initiated by the National Bank for Agriculture and Rural Development (NABARD) in 1992.

Statement 2 is correct because in an SHG, all members of a group are jointly liable for the loans that are taken by any individual member. This means that if one member of the group defaults on their loan, the other members of the group are responsible for repaying the loan.

Statement 3 is correct because the Regional Rural Banks (RRBs) and Scheduled Commercial Banks (SCBs) are the two main types of banks that provide financial support to SHGs. The RRBs were specifically created to provide banking services to the rural poor, and the SCBs have a mandate to provide financial services to all segments of the population, including the poor.

Here are some additional information about SHGs:

  • SHGs are small, informal groups of people who come together to save money and access credit.
  • SHGs are typically formed by women, and they often focus on micro-enterprise development.
  • SHGs have been shown to be an effective way to reduce poverty and improve the lives of the poor.
  • The SHG programme has been a major success in India, and it has been replicated in other countries around the world.

February 2024