Consider the following statements: 1. The Self-Help Group (SHG) programme 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?

Question

YESPYQ · Accepted Answer

Correct answer: Only two. Statement 1 is incorrect : The SHG movement in In- dia was not initiated by the State Bank of India. The Nation- al Bank for Agriculture and Rural Development (NABARD) played a pivotal role in promoting and scaling up SHGs by pro- viding financial support, capacity-building initiatives, and policy frameworks. In 1992, NABARD launched the SHG-Bank Link- age Programme which facilitated the integration of SHGs into the formal banking system. UPSC GS Paper-I PYQs 276 Statement 2 is correct : All members of a Self-Help Group (SHG) share responsibility for any loans taken by individual members. This system fosters mutual support and peer account- ability thereby encouraging timely repayments and financial dis- cipline. Generally banks extend loans to the SHG as a single entity, which then distributes funds among its members. In the event of a default, the group collectively ensures repayment, safeguarding its overall creditworthiness. Statement 3 is correct : Regional Rural Banks (RRBs) and Scheduled Commercial Banks (SCBs) play a crucial role in supporting Self-H

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