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Money and Credit
Question
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Explain the working of Self Help Group.

Answer

The working of Self Help Group:

(i)A typical SHG has 15-20 members, usually belonging to one neighbourhood, who meet and save regularly.

(ii)Saving per member varies from Rs 25 to Rs 100 or more, depending on the ability of the people to save. Members can take small loans from the group itself to meet their needs.

(iii)The group charges interest on these loans but this is still less than what the moneylender charges. After a year or two, if the group is regular in savings, it becomes eligible for availing loan from the bank.

(iv)Loan is sanctioned in the name of the group and is meant to create selfemployment opportunities for the members.

(v)Most of the important decisions regarding the savings and loan activities are taken by the group members. The group decides as regards the loans to be granted — the purpose, amount, interest to be charged, repayment schedule etc. Also, it is the group which is responsible for the repayment of the loan.

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Some More Questions From Money and Credit Chapter

Look at a 10 Rupee note. What is written on top? Can you explain this statement?

In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary?

Analyse the role of credit for development.

Manav needs a loan to set up a small business. On what basis will Manav decide whether to borrow from the bank or the moneylender? Discuss.

In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.

(a) Why might banks be unwilling to lend to small farmers?

(b) What are the other sources from which the small farmers can borrow?

(c) Explain with an example how the terms of credit can be unfavourable for the small farmer.

(d) Suggest some ways by which small farmers can get cheap credit.

Majority of the credit needs of the _________ households are met from informal sources.

_________ costs of borrowing increase the debt-burden.

_________ issues currency notes on behalf of the Central Government.

Banks charge a higher interest rate on loans than what they offer on ________.

_________ is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.