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Self-Help Groups (SHGs)… (Class 12 Economics 2026, Q23)

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EconomicsCBSE Class 12 · Board exam 2026, set 58/5/1 · 1 mark · MCQ

CBSE Class 12 Economics 2026: question 23

Set in the CBSE Class 12 board exam of 2026, paper 58/5/1, section B, question 23, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q23 · 1 mark · MCQRural Development

Self-Help Groups (SHGs) have emerged to fill the gap in the formal credit system as they ____________. (Choose the correct option to fill in the blank)

  1. (A)Provide loan after obtaining suitable collateral
  2. (B)Lend at a high rate of interest
  3. (C)Promote thrift in larger proportions
  4. (D)Generally provide collateral-free credit to their members

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 58/5/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Why can the rural poor not borrow from banks?

Hint 2

SHG loans are based on mutual trust among members.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Poor rural households often cannot offer collateral, so formal banks do not lend to them.

  2. SHGs pool members' small savings and lend to members, generally without collateral and at reasonable interest, filling this gap in formal credit. Option (D).

    1 mark

Answer: (D) Generally provide collateral-free credit to their members

Where the marks are

  • SHGs give collateral-free credit (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Rural Development, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 58/5/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.