Question 14 of 20
Q.Account for the role of Self-Help Groups (SHGs) in financial inclusion in Manipur.
Manipur CohsemCOHSEM Manipur Higher Secondary 1st Year (Commerce) 2023Subjective· 4mImportance★★★★★est
70% · 14/20 Questions
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Start your 14-day free trial to unlock the full solution →Self-Help Groups bring Manipur's unbanked, remote and women population into the formal financial fold through group savings, credit, and bank linkage.
Self-Help Groups (SHGs) have played an important role in advancing financial inclusion in Manipur, particularly among rural, hill, and tribal communities that are otherwise hard for formal banks to reach:
- SHG–Bank Linkage: SHGs pool the small savings of their (mostly women) members and link the group to a bank account, allowing members who individually could never meet a bank's documentation/collateral requirements to access formal savings and credit facilities.
- Collateral-free microcredit: Banks lend to SHGs against group guarantee rather than individual collateral, giving members access to small loans for income-generating activities (handloom, horticulture, piggery, petty trade) that would otherwise be unavailable to them.
- Promoting thrift and savings habit: Regular group savings instil financial discipline and build a credit history that helps members graduate to larger individual bank loans over time.
- Reducing dependence on moneylenders: By providing an alternative formal credit source, SHGs reduce reliance on exploitative informal moneylenders common in remote areas. …
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