Question

how do SHGs help the borrower to overcome the probleum of lack of collateral . explain with example ?
*plz answer it immediately*​

Answer 1

Answer:

SHGs help borrowers to overcome the problem of lack of collateral in the following ways: It is the group that is responsible for the repayment of loan. The formal sector is willing to lend to the members of SHGs because of their good track record of managing the credit.

Explanation:

• Self-help group is able to solve collateral problem.

• Members can take small loans from the group itself to meet their needs without any collateral.

• The Group charges interest on their loans but this is less than what the money lenders charge.

• Most of the decisions regarding savings and loan activities are taken by the group members.

• The group decides as regards the loans to be granted the purpose amount, interest to be charged, repayment schedule etc.

• The group is responsible for the repayment of the loan.

• Any case of non-repayment of loan by any one member is followed up seriously by other members in the group.

Because of this mentioned features, banks are willing to lend to the poor women when organised in SHGs, even though they have no collateral as such.Groups meets regularly and provides a platform to discuss and act on variety of social issues.

Answer 2

Answer:

Answer:

SHGs help borrowers to overcome the problem of lack of collateral in the following ways: It is the group that is responsible for the repayment of loan. The formal sector is willing to lend to the members of SHGs because of their good track record of managing the credit.

Explanation:

Self-help group is able to solve collateral problem.

Members can take small loans from the group itself to meet their needs without any collateral.

The Group charges interest on their loans but this is less than what the money lenders charge.

Most of the decisions regarding savings and loan activities are taken by the group members.

The group decides as regards the loans to be granted the purpose amount, interest to be charged, repayment schedule etc.

The group is responsible for the repayment of the loan.

Any case of non-repayment of loan by any one member is followed up seriously by other members in the group.

Because of this mentioned features, banks are willing to lend to the poor women when organised in SHGs, even though they have no collateral as such.Groups meets regularly and provides a platform to discuss and act on variety of social issues.