Question

In the context of microfinance, what does 'S' stand for in SHG?

• A. Social
• B. Steady
• C. Sustainable
• D. Self

Answer 1

Answer:

D. Self

Understanding SHG in Microfinance

The 'S' in SHG stands for 'Self'.

• SHG is an acronym for Self-Help Group.

• Self-Help Groups are typically small, informal associations of people who choose to save and borrow from each other on a regular basis.

• These groups are generally composed of individuals with similar socio-economic backgrounds, often women from marginalized communities.

• The primary aim of an SHG is to promote the habit of saving among its members and to provide a source of timely and accessible credit.

• Members contribute small amounts regularly into a common fund. This accumulated fund is then used to provide loans to members in need, usually at lower interest rates than those charged by informal lenders.

• The principle of 'mutual help' is central to SHG operations, fostering financial independence and empowerment.

• SHGs play a significant role in poverty alleviation and women's empowerment in many developing countries, including India.

• Key Feature: The 'Self' aspect emphasizes that the group is formed and managed by the members themselves, without external control, although external agencies might provide training and support.