Consider the following statements about Self-Help Groups (SHGs):
1. SHGs typically function as formal cooperative societies with legally binding agreements for resource pooling.
2. The registration of SHGs under the Societies Registration Act, 1860, or the Mutual Benefit Societies Act, 1995, is mandatory for all such groups.
3. The primary sources of funds for SHGs are microfinance institutions, government schemes, and member contributions, with a focus on informal lending practices.
4. SHGs often provide micro-credit to their members for income-generating activities, but do not engage in any commercial or profit-driven activities.

Select the correct answer using the codes given below:
(a) 1 and 2 only
(b) 2 and 4 only
(c) 3 and 4 only
(d) 1, 3 and 4 only

Question

Consider the following statements about Self-Help Groups (SHGs):
1. SHGs typically function as formal cooperative societies with legally binding agreements for resource pooling.
2. The registration of SHGs under the Societies Registration Act, 1860, or the Mutual Benefit Societies Act, 1995, is mandatory for all such groups.
3. The primary sources of funds for SHGs are microfinance institutions, government schemes, and member contributions, with a focus on informal lending practices.
4. SHGs often provide micro-credit to their members for income-generating activities, but do not engage in any commercial or profit-driven activities.

Select the correct answer using the codes given below:
(a) 1 and 2 only
(b) 2 and 4 only
(c) 3 and 4 only
(d) 1, 3 and 4 only

ONLiNE UPSC · Accepted Answer

Statement 1 is incorrect. SHGs do not function as formal cooperative societies. They are informal groups where members pool resources for mutual benefit but are not bound by the legal structure or agreements typical of cooperative societies. Their primary focus is on savings, internal lending, and promoting self-reliance, rather than formal legal frameworks.

Statement 2 is incorrect. Registration under the Societies Registration Act, 1860, or the Mutual Benefit Societies Act, 1995, is not mandatory for SHGs. While some SHGs choose to register for accessing government support or for formalizing their activities, registration is optional and depends on the goals and scale of the group.

Statement 3 is correct. SHGs primarily rely on microfinance institutions (MFIs), government schemes, and member contributions to fund their activities. These funds are used for micro-lending, with an emphasis on informal lending practices where the group offers small loans to members, primarily for income-generating activities or emergency needs.

Statement 4 is correct. SHGs do not engage in profit-driven commercial activities. Their core focus is on providing micro-credit to members, often for income-generating activities. While they encourage savings and may generate some surplus, their objective is social and economic empowerment, not profit-making.

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Self-Help Groups (SHGs)

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M Question 1	⏱ 0
Consider the following statements about Self-Help Groups (SHGs): 1. SHGs typically function as formal cooperative societies with legally binding agreements for resource pooling. 2. The registration of SHGs under the Societies Registration Act, 1860, or the Mutual Benefit Societies Act, 1995, is mandatory for all such groups. 3. The primary sources of funds for SHGs are microfinance institutions, government schemes, and member contributions, with a focus on informal lending practices. 4. SHGs often provide micro-credit to their members for income-generating activities, but do not engage in any commercial or profit-driven activities. Select the correct answer using the codes given below: (a) 1 and 2 only (b) 2 and 4 only (c) 3 and 4 only (d) 1, 3 and 4 only