Social Science (087) — CBSE Class 10 board question

Self-Help Groups (SHGs) — Functioning:

1. Formation: Rural poor, especially women, are organised into small groups of 15–20 members belonging to the same neighbourhood. They meet and save regularly, contributing ₹25–₹100 per month depending on their capacity.

1. Internal Lending: Members can borrow small amounts from the group's pooled savings to meet their needs. The group charges interest, but it is lower than moneylender rates.

1. Bank Linkage: After 1–2 years of regular savings, the group becomes eligible for a bank loan sanctioned in the group's name, used for self-employment (buying seeds, cattle, sewing machines, housing materials, etc.).

1. Decision-Making: Members themselves decide the purpose, amount, interest rate, and repayment schedule of loans.

1. Repayment Responsibility: The group collectively ensures repayment; any default is followed up by other members, making banks willing to lend without collateral.

1. Social Benefits: SHGs also serve as a platform to discuss health, nutrition, and domestic violence, making women financially and socially self-reliant.

Source: Money and Credit, Chapter 3 — Self-Help Groups for the Poor

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• Examiners expect coverage of: formation, savings, internal credit, bank linkage, group decision-making, collateral-free lending, and social role.
• Mention "15–20 members," "no collateral needed," and "group responsibility for repayment" — these are key scoring points.
• End with the social/empowerment role for the final point; it rounds off the answer well.
• Avoid lengthy paragraphs — crisp numbered points work best for 5 marks.