Current Affairs · SHG-Bank Linkage & Rural Microfinance
An SHG named 'Pragati' has been operating successfully for 4 years. Recently, two members defaulted on internal loans due to a family crisis. The other 13 members covered the savings gap from group interest income to maintain 'Panchasutra' status for annual bank review. However, the bank manager discovered the internal defaults and window-dressed record books. According to SHG-Bank Linkage best practices, how should the group and bank handle this?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The SHG should take a fresh loan from a moneylender to pay off the bank and avoid being caught.
- 2The bank should only renew the loan for the 13 members who are paying, and legally remove the 2 defaulters from the group's account.
- 3The group should be honest with the bank, as the bank can still renew the loan if the group demonstrates a collective plan to recover the internal dues.✓
- 4The bank must immediately cancel the loan and initiate recovery against all 15 members as a group default.
Correct answer
The group should be honest with the bank, as the bank can still renew the loan if the group demonstrates a collective plan to recover the internal dues.
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