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SAI INTERNATIONAL SCHOOL, BHUBANESWAR.
                                        Class X: SOCIAL STUDIES – ECONOMICS

                                 CHAPTER - 3- MONEY AND CREDIT (Pg.  No. 50-52)
                                                      LESSON NOTES


               NOTES-
               SELF-HELP GROUP FOR THE GROUP – I

               1.      We have seen that poor households are still dependent on informal sources of
                       credit.
               2.      Banks are not present everywhere in rural India. Even when they are present,
                       getting a loan from a bank is much more difficult than taking a loan from informal
                       sources.
               3.      Absence of collateral is one of the major reasons which prevent the poor from
                       getting bank loans.
               4.      Informal lenders such as moneylenders, on the other hand, know the borrowers
                       personally and hence are often willing to give a loan without collateral. The
                       borrowers can, if necessary, approach the moneylenders even without repaying
                       their earlier loans. However, the moneylenders charge very high rates of interest
                       keep no records of the transactions and harass the poor borrowers.
               5.      In recent years, people have tried out some newer ways of providing loans to the
                       poor.
               6.      The idea is to organise rural poor, in particular women, into small Self Help
                       Groups (SHGs) and pool (collect) their savings.
               7.      A typical SHG has 15-20 members, usually belonging to one neighbourhood,
                       who meet and save regularly. Saving per member varies from Rs 25 to Rs 100 or
                       more, depending on the ability of the people to save.
               8.      Members can take small loans from the group itself to meet their needs. The
                       group charges interest on these loans but this is still less than what the
                       moneylender charges
               9.      After a year or two, if the group is regular in savings, it becomes eligible for
                       availing loan from the bank.
               10.     Loan is sanctioned in the name of the group and is meant to create self
                       employment opportunities for the members.
               11.     For instance, small loans are provided to the members for releasing mortgaged
                       land, for meeting working capital needs (e.g. buying seeds, fertilisers, raw
                       materials like bamboo and cloth), for housing materials, for acquiring assets like
                       sewing machine, handlooms, cattle, etc.
               12.     Most of the important decisions regarding the savings and loan activities are
                       taken by the group members.
               13.     The group decides as regards the loans to be granted — the purpose, amount,
                       interest to be charged, repayment schedule etc.  Also, it is the group which is
                       responsible for the repayment of the loan.
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