How do self-help groups (SHGs) and microfinance help in financial inclusion?

Exercises · Q7

Q. How do self-help groups (SHGs) and microfinance help in financial inclusion?

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What they are. A self-help group (SHG) is a small voluntary group, often of women, whose members regularly pool small savings. Microfinance is the provision of small loans and related services to such low-income groups.

How they help inclusion:

Collective creditworthiness — members who individually lack collateral or a credit record can borrow together through the SHG–bank linkage programme.
Habit of thrift — regular pooled savings build a financial record and discipline.
Affordable credit for livelihoods — group loans at reasonable interest fund small enterprises, replacing moneylenders.
Women's empowerment — the movement gives rural women control over savings and income. …

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

COHSEM Manipur Higher Secondary 1st Year (Commerce) 2025Set ANNUAL1 markMCQ
$Q. In the following question, a statement of Assertion (A) is followed by a statement Reason(R). Choose the correct alternative among those given below : (A) Both Assertion(A) and Reason(R) are true and Reason(R) is the correct explanation of Assertion(A) (B) Both Assertion(A) and Reason(R) are true and Reason(R) is not the correct explanation of Assertion(A) (C) Assertion(A) is true but Reason(R) is false (D) Assertion(A) is false but Reason(R) is true Assertion(A) : A Self Help Group is a financial intermediary committee usually composed of 10 to 20 local women. Reason(R) : Self Help Groups empowers the saving habits especially of rural women.$
›Reveal solutionSolution

A is true, R is true, but R does not explain A.

Assertion (A) is correct: a Self Help Group (SHG) is indeed a voluntary financial intermediary/informal association, typically composed of 10 to 20 local women (or men) from similar socio-economic backgrounds, who come together to pool small savings regularly and extend credit to members.

Reason (R) is also correct as a general statement: SHGs do empower the saving habit, especially among rural women, by encouraging regular small deposits and building financial discipline and confidence.

…

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COHSEM Manipur Higher Secondary 1st Year (Commerce) 2024Set ANNUAL1 mark
$Q. Suggest one banking service to improve the financial literacy and payment mechanisms to rural households in Manipur.$
›Reveal solutionSolution

Expanding the Business Correspondent (Bank Mitra) model — doorstep banking agents who also train villagers in using mobile/UPI-based digital payments — is a concrete, practical banking service to raise rural financial literacy and strengthen payment access in Manipur.

Many rural households in Manipur's hilly and remote areas lack easy physical access to bank branches, and many account-holders remain unfamiliar with digital payment tools. A Business Correspondent (Bank Mitra) posted in or visiting each village can (i) help households open and operate basic (BSBDA/Jan Dhan-type) accounts, (ii) conduct simple on-the-spot demonstrations of mobile banking, UPI and ATM/debit card use so households become comfortable with digital payment mechanisms, and (iii) explain savings, credit and insurance products in the local language. This single service — doorstep banking combined with hands-on digi …

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←Previous questionQ6 — Explain the role of the Pradhan Mantri Jan-Dhan Yojana (PMJDY) and the…→Next questionQ8 — Describe the achievements of financial inclusion in Manipur.

Q.How do self-help groups (SHGs) and microfinance help in financial inclusion?

Concept understanding — Drivers of Financial Inclusion in India

Q.How do self-help groups (SHGs) and microfinance help in financial inclusion?

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