Consider the following statements:The Self-Help Group (SHG) programme was originally initiated by th

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Question

Consider the following statements:The Self-Help Group (SHG) programme was originally initiated by the State Bank of India by providing microcredit to the financially deprived.In an SHG, all members of a group take responsibility for a loan that an individual member takes.The Regional Rural Banks and Scheduled Commercial banks support SHGs.How many of the above statements are correct?

Accepted Answer

Correct Answer: B — Only twoStep-by-step Solution:Statement 1 — SHG programme was originally initiated by State Bank of India: This is incorrect. The Self-Help Group concept has its roots in the Grameen Bank model developed by Muhammad Yunus in Bangladesh (founded 1983). In India, the SHG-Bank Linkage Programme was initiated by NABARD (National Bank for Agriculture and Rural Development) in 1986–87, not SBI. The pilot programme linked SHGs with banks, especially in rural areas. SBI later became a major participant, but the initiative was NABARD's. ✗Statement 2 — All members take responsibility for an individual member's loan: This is correct in the general model of SHG lending. The SHG system operates on the principle of joint liability and mutual guarantee — all members of the group collectively stand guarantee for each other's loans. However, NABARD guidelines also provide for Joint Liability Groups (JLGs) which can be formed within SHGs for larger individual loans, where only JLG members stand guarantee. The basic SHG principle involves collective responsibility. ✓Statement 3 — Regional Rural Banks and Scheduled Commercial Banks support SHGs: This is correct. RRBs play a crucial role in SHG financing at the rural level and are key financing institutions under the SHG-Bank Linkage Programme. Scheduled Commercial Banks (including public sector, private sector, and cooperative banks) also participate extensively in linking SHGs to formal credit. The RBI and Government of India have specifically requested all scheduled commercial banks to meet the credit requirements of SHG members. ✓Why other options are incorrect:Option A (Only one): Incorrect — statements 2 and 3 are correct.Option C (All three): Incorrect — statement 1 is wrong.Option D (None): Incorrect — two statements are correct.Key Concept: SHGs are informal groups of 10–20 members (typically women) from similar socio-economic backgrounds who save regularly and use pooled savings to give small loans to members. India has the world's largest SHG movement, with over 12 million SHGs linked to banks. The Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM) is the flagship programme promoting SHGs in India. NABARD's SHG-Bank Linkage Programme has transformed rural financial inclusion.

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