' 'Self Help Groups' help borrowers to overcome the problem of lack of collateral.' Examine the statement.
Self help groups (SHG) have helped borrowers to borrow money without collateral in the following ways :
(i.) Self help groups have organised rural poor more so women in collecting their money and in extending loans to its members.
(ii.) SHG charge less rate of interest as compared with any other form of rural banking or even those charged by moneylenders.
(iii.) These groups gradually can seek loans from the bank so as to create employment opportunities for its members.
(iv.) Banks have been extending loans to these groups to meet their needs like buying fertilizers, seeds, raw materials etc.
(v.) These SHG have emerged as building blocks for the rural poor as it is the group as a whole which is responsible for the repayment of the loan. In case, of non repayment it is taken up in a serious manner by the group members.
