Social Science (087) — CBSE Class 10 board question

Working System of a Self Help Group (SHG):

1. Formation: An SHG consists of 15–20 members, usually from the same neighbourhood, mostly rural poor women.

1. Regular Savings: Members meet regularly and save small amounts — ₹25 to ₹100 or more per month, depending on their ability.

1. Internal Lending: Members can take small loans from the group's pooled savings to meet personal needs. The group charges interest, but it is much 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 activities like buying seeds, cattle, sewing machines, etc.

1. Group Decision-Making: All major decisions — purpose, amount, interest rate, repayment schedule — are taken by members collectively. The group is jointly responsible for repayment, so banks lend willingly even without individual collateral.

1. Social Benefits: Regular meetings also serve as a platform to discuss social issues like health, nutrition, and domestic violence.

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

---

• Examiners expect you to cover: formation/size, savings, internal loans, bank linkage, group decision-making, and social role — that's roughly one point per mark.
• Mention no collateral needed as it is the key advantage SHGs provide over banks.
• Avoid writing vague sentences; use specific figures (15–20 members, ₹25–₹100) to show textbook accuracy.
• The question asks you to "explain as a member," so a point-wise format reads naturally and scores well.