Solution:
The given statement is true.SHGs, short for Self-Help Groups, are commonly found in rural areas, where the absence of collateral is one of the significant reasons which prevents the poor from obtaining bank loans. In contrast, no documentation or paperwork is required to get loans from SHGs. SHGs usually lend with a lower interest rate than moneylenders, making it easier for the borrower to repay their loan. As we know that cheap and affordable credit helps develop the poor, it creates employment opportunities for the poor rural members, thus leading to their development. SHGs also build a habit in the poor to save a part of their income regularly. SHGs also encourage rural women to become responsible and financially self-reliant and provide a healthy platform in the regular meetings to discuss current issues like health, nutrition, domestic violence, etc., in the community. This is why SHGs are referred to as the “building blocks of organisation of the rural poor”.
