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
a. Only one
b. Only two
c. All three
d. None

Question from UPSC Prelims 2023 GS Paper

Explanation :
Correct Answer – b) Only two

History of Self-Help Groups in India

The origin of Self-Help Groups (SHGs) in India dates back to the establishment of the Self-Employed Women’s Association (SEWA) in 1972. This marked the beginning of a significant movement towards collective financial responsibility and empowerment in India.

Functioning of Self-Help Groups

In a typical SHG, all members share responsibility for loans taken by individual members. This collective accountability model ensures that if one member fails to repay, others step in to cover the loan. This approach not only fosters mutual support among members but also guarantees productive use of the borrowed funds.

Role of Regional Rural Banks and Scheduled Commercial Banks

Regional Rural Banks (RRBs) and Scheduled Commercial Banks (SCBs) play a crucial role in supporting SHGs. They provide essential credit services and collaborate with non-governmental organizations (NGOs) and other entities to help establish and maintain SHGs. This support from RRBs and SCBs is vital for SHGs to access formal financial services, which significantly enhances their financial stability and growth.