SHGs stands for:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Self-Help Groups
Self-Help Groups (SHGs) are small groups, often of rural women, who save together. Each member puts in a small amount. From the pooled money, needy members get loans that they repay in small instalments at reasonable interest. SHGs fill the gap left by formal credit, which often asks for a security that the poor do not have.
NCERT (2026-27): “…The institutional structure of rural banking today consists of a set of multi-agency institutions, namely, commercial banks, regional rural banks (RRBs), cooperatives and land development banks. They are expected to dispense adequate credit at cheaper rates. 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.…” |