Consider the following statements:
1. The Self-Help Group (SHG) program 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
15. Ans: b
Explanation:
The SHG-Bank Linkage programme that synthesizes ‘formal financial systems’(in terms of a formal institution providing credit) with the ‘informal sector’(comprising of rural poor with no formal credit history – exclusively women in case of DAY-NRLM), has emerged as a preferred vehicle for providing financial services to the hitherto unbanked poor. The Self-Help Group – Bank Linkage Programme (SHG-BLP) was formulated by NABARD in 1989 and was launched as a pilot project in 1992 to integrate unreached rural poor with the formal sector by providing access to institutional credit. The banks were encouraged to lend directly to SHGs with refinance support from NABARD.
The pilot project was conceived of as a partnership between SHGs, Banks and NGOs in which the Reserve Bank of India (RBI) allowed banks to lend directly to SHGs and NABARD committed to providing re-finance and promotional support. NABARD acted as the catalyst for the SHGBank Linkage programme
Hence, statement 1 is incorrect.
All members take mutual guarantee for loans taken by the SHG. In such cases, a smaller “Joint Liability Group (JLG)” from members of an SHG may be created. The members of JLG will continue to remain members of the SHGs and continue to participate in the activities of SHGs are earlier. Banks may encourage creation of such enterprise / livelihood based JLGs as a separate entity. There is a Strategic shift away from targeting individuals to group oriented lending approach (e.g. Integrated Rural Development Program to Swarnajayanti Gram Swarozgar Yojana).
SHG lending is part of priority sector guidelines for Banks in India comprising of commercial , cooperatives and RRBs
Hence, statement 2 and 3 are correct.
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