Answer :
Final answer:
A Self-Help Group (SHG) is a group of individuals, typically women, who come together to save money and provide each other with small loans. SHGs help borrowers overcome the lack of collateral by providing loans based on trust and peer support. They also offer training programs to enhance members' skills and knowledge.
Explanation:
A Self-Help Group (SHGs) is a group of individuals, typically women, who come together to save money and provide each other with small loans. The primary role of SHGs is to help members overcome the problem of lack of collateral by providing loans based on trust and peer support rather than requiring traditional forms of collateral. Through regular savings, SHGs build a common fund that members can borrow from for various needs, such as starting a business or addressing emergencies.
For example, let's say a member of XYZ SHG wants to start a small business but doesn't have collateral to secure a loan from a bank. Instead of relying on collateral, the SHG would assess the member's character and trustworthiness based on their involvement and actions within the group. If the member is deemed creditworthy, they would receive a loan from the SHG using the common fund.
SHGs also provide training and capacity-building programs to enhance members' skills and knowledge in areas such as financial literacy, entrepreneurship, and leadership. This support empowers the borrowers to utilize the loans effectively and achieve sustainable economic growth.
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