Self Help groups (SHG) have helped borrowers to borrow money without collateral in the following ways:
(i) Self help groups have organised rural poor more so women in collecting their money and in extending loans to its members.
(ii) SHG charge less rate of interest as compared with any other forms of rural banking or even those charged by moneylenders.
(iii) These groups gradually can seek loans for the bank so as to create employment opportunities for its members.
(iv) Banks have been extending loans to these groups to meet their needs like buying fertilizers, seeds, raw materials etc.
(v) These SHG have emerged as building blocks of the rural poor as it is the group as a whole which is responsible of the repayment of the loan. In case, of non repayment it is taken up in a serious manner by the group members. Thus, because of this, banks offer money to women organised in these groups without any collateral. Similarly, members of these groups can get loans when required which is repayable in small instalments.
