Financing through Self Help Groups (SHGs) is referred to as:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Micro-credit Financing
A Self-Help Group (SHG) is a small group of rural people who save a little each month. From the pooled money, members get small loans at reasonable interest, repaid in small instalments. Such small credit given through SHGs is called micro-credit.
SHGs fill the gap left by formal banks, which ask for collateral that poor households do not have.
They have helped in the empowerment of women.
NCERT (2026-27): “5.3 Credit and Marketing in Rural Areas …Recently, Self-Help Groups (henceforth SHGs) have emerged to fill the gap in the formal credit system because the formal credit delivery mechanism has not only proven inadequate but has also not been fully integrated into the overall rural social and community development. Since some kind of collateral is required, vast proportion of poor rural households were automatically out of the credit network. The SHGs promote thrift in small proportions by a minimum contribution from each member. From the pooled money, credit is given to the needy members to be repayable in small instalments at reasonable interest rates.… …Such credit provisions are generally referred to as micro-credit programmes. SHGs have helped in the empowerment of women.…” |