Question

Why are banks willing to lend to women organised in SHGs?

Answer 1

Self Help Groups (SHGs) is a small group having 15-20 members from local neighborhood who meet regularly to save small amount say Rs.25 to Rs.100. Members can take small loan from the group and repay it with less interest that usual money lenders. After one or two years, if the group is sill saving, they become eligible for availing bank loans. SHGs are the building blocks of organization of the rural poor. Lending loans to such groups help women to become financially self-reliant, to provide working capital need, to buy assets for their business like sewing machines, cattle etc.

Answer 2

Banks do not wish to give loans to the poor, who have no collateral. Bank loans require proper documents and collateral, as security against lo

The borrowers who have not paid any previous loans are defaulters, and banks might not be willing to lend them again.

The banks might not be willing to lend those entrepreneurs who are going to invest in the business with high risks.
Banks prefer not to lend money to the poor farmers and land less labourers, because more often than not they don't have the required documents to take loan.And their jobs are not scured enough,so the band avoid giving them loan.
Banks do not wish to give loans to the poor, who have no collateral. Bank loans require proper documents and collateral.