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Social Science (087) — AI-generated practice question

AI-generated practice question — model-generated for extra practice, not a previous-year CBSE board question.

Q1. [1] medium exam-ready
Why are banks willing to lend to poor women organised in Self Help Groups even when individual members have no collateral?
  1. A The government provides a guarantee for each member's loan
  2. B The group itself is responsible for repayment and monitors its members
  3. C The RBI instructs banks to waive the collateral requirement for all rural loans
  4. D SHG members deposit gold with the bank before taking a loan
Generated by claude-sonnet-4-6 · 2026-06-26 13:22 · grounding rag
Model Answer

Answer: B

The group itself is responsible for repayment and monitors its members. Any non-repayment by one member is followed up seriously by other members, so the group acts as a social guarantee replacing collateral.

Source: Money and Credit, Self-Help Groups for the Poor

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Explanation

The passage explicitly states: "It is the group which is responsible for the repayment of the loan. Any case of non-repayment… is followed up seriously by other members. Because of this feature, banks are willing to lend to the poor women when organised in SHGs, even though they have no collateral."

The key concept: group responsibility replaces collateral — this is the examiner's expected point.

Previous-year CBSE Grade 10 board exam questions, organised by subject and chapter, each with a model answer — free to read and print.