Banking · Financial Inclusion & SHGs
A bank is reviewing lending to two Self-Help Groups (SHGs) under DAY-NRLM: SHG 'A': Has 15 members, active for 18 months, with a 98% internal recovery rate. SHG 'B': Has 25 members, active for 8 months, with an 85% internal recovery rate. Based purely on SHG Grading parameters, which is the bank most likely to sanction the loan to first, and why?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1SHG 'B', because SHGs with more than 20 members are given priority under DAY-NRLM guidelines.
- 2SHG 'A', because its long existence and high internal repayment rate indicate superior institutional and financial management.✓
- 3SHG 'B', because it has more members, reducing the per-member loan risk.
- 4SHG 'A', because it meets the minimum membership limit and exceeds the minimum internal activity period.
Correct answer
SHG 'A', because its long existence and high internal repayment rate indicate superior institutional and financial management.
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