Question

What are the different ways in which banks fund Self Help Groups?

Answer 1

There are three distinct modes of credit to SHGs. Under the first mode, banks lend directly to the SHGs. In the second mode, banks provide loans to the NGOs for onward lending to the SHGs and ultimately to micro-entrepreneurs. Under the third mode, banks extend credit to the SHGs with the NGOs serving as facilitators. Out of these three methods, the last method of direct lending by banks with NGO facilitation is widely practiced.