The ____ helps borrowers overcome the problem of lack of collateral.

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The self-help group helps borrowers overcome the problem of lack of collateral. The lack of collateral is the major reason why the poor find it hard to borrow from banks or any formal source. Then they have to turn to informal lenders who take advantage of the poor and charge high rates of interest. People are now trying out different ways to provide loans to the poor. Rural men or women are grouped into Self Help Groups, and they collect their savings to provide small loans to members. An interest rate is charged, but it is much lower than what is charged by informal sources. Thus, these self-help groups help borrowers overcome the problem of lack of collateral.

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