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?
Answer & explanation
Answer: (b) Only two
Only statements 2 and 3 are correct. The SHG-Bank Linkage Programme was started by NABARD, not the State Bank of India, but in an SHG the group as a whole stands behind each member's loan, and banks lend to and refinance SHGs.
- ✗ 1. NABARD launched the SHG-Bank Linkage pilot in 1992-93, linking about 500 SHGs to banks. The State Bank of India did not initiate the programme.
- ✓ 2. The group decides on loans and is responsible for repayment, and other members follow up seriously if any one member does not repay; this collective responsibility is why banks lend to poor households without collateral.
- ✓ 3. Banks finance SHGs with 100% refinance support from NABARD, and Regional Rural Banks (RRBs) are among the rural financial institutions that promote and link SHGs to credit. Commercial banks take part in the same bank linkage.
Remember · SHG-Bank Linkage began with NABARD in 1992-93. SHG members share responsibility for repayment, and banks (commercial banks, RRBs, cooperatives) lend to SHGs with NABARD refinance.
📘 Read it in NCERT: Class 10 Understanding Economic Development, Ch 3 (practise this chapter)
Sources
- NCERT Class 10 · Understanding Economic Development, Chapter 3 “Also, it is the group which is responsible for the repayment of the loan. Any case of non- repayment of loan by any one member is followed up seriously by other members in the group.”
- NABARD: Micro Credit Innovations (SHG-Bank Linkage Programme) ↗ “Banks are also provided 100% refinance support by NABARD for financing of SHGs.”
- NABARD: SHG Bank Linkage Programme for Rural Poor - An Impact Assessment (2002) ↗ “impact of micro finance channelised through SHG Bank Linkage programme implemented by NABARD since 1992”
Question and answer: UPSC's official GS Paper I (2023, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·