Question

What is the primary mechanism through which SHGs offer loans to their members?

• A. By borrowing from multinational corporations
• B. Through pooled savings and group-based lending
• C. By receiving direct government subsidies
• D. By investing in global financial markets

Answer 1

Answer:

B. Through pooled savings and group-based lending

SHGs function on the principle of group-based lending. Members contribute to a collective fund through regular savings. The pooled money is then loaned to members based on their needs, fostering financial discipline and collective responsibility.