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SHEG (Self Help Groups)

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SHEG (Self Help Groups) - Lesson Summary

Poor households in India largely depend on the informal sector for their credit requirements. Banks demand collateral against a loan that the poor people are unable to provide.

To cater to this problem is organising self-help groups. A group of 15-20 members save regularly to create a savings pool. Members of the group can take small loans from their combined savings. The loans bear interest at low rates.

After saving regularly for a few years, a self-help group becomes eligible for a loan from a bank without providing any collateral. The bank loan is used to generate more income and employment opportunities for the members of the group.

The members of a self-help group make all the decisions jointly and are jointly responsible for the repayment of loans.

Banks also extend loans to poor women organised in self-help groups. Self-help groups allow poor people access to affordable and easy credit. The Grameen Bank of Bangladesh is a brilliant example of meeting the credit needs of the poor at affordable rates.


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