Indian Economic Development: Rural Development · Class 12 · CBSE · Commerce Economics
Which statement correctly describes the functioning of self-help groups (SHGs) in rural credit?
Practice question from Indian Economic Development: Rural Development (Class 12 · CBSE · Commerce Economics), with the correct answer and a step-by-step solution.
hard · MCQ · Q-46A1EE
Which statement correctly describes the functioning of self-help groups (SHGs) in rural credit?
- A.Members save regularly, pool their savings and provide small loans to one another, often with access to bank credit.Correct answer
- B.SHGs provide loans only to large landowners against substantial collateral.
- C.SHGs are formal commercial banks that accept deposits from the general public.
- D.SHGs eliminate the need for all institutional sources of rural credit.
Solution
SHGs encourage regular thrift, pool members’ savings and provide small loans, especially to poor households. Their linkage with banks can improve access to institutional credit and reduce dependence on moneylenders.
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