Consider the following statements : 1. The Self-Help Group (SHG) programme was originally initiated by the State Bank of India by providing microcredit to the financially deprived. 2. In an SHG, all members of a group take responsibility for a loan that an individual member takes. 3. The Regional Rural Banks and Scheduled Commercial Banks support SHGs. How many of the above statements are correct?

Answer: B. Only TWO of the three statements about SHGs are correct. Statement 1 is WRONG. The SHG programme in India was NOT initiated by State Bank of India. NABARD launched the SHG-Bank Linkage Programme (SBLP) in 1992 as a pilot, and it was scaled up nationally thereafter. Earlier microcredit roots trace to organisations like MYRADA (Karnataka) and PRADAN; the formal SHG linkage model was pioneered by NABARD with all participating commercial banks. Statement 2 is CORRECT. SHGs operate on JOINT LIABILITY: all members co-guarantee loans taken by individual members. This peer monitoring is the defining innovation of SHG microfinance and is the reason for high repayment rates (95%+) compared to conventional individual lending to the same income segment. Statement 3 is CORRECT. SHG-Bank Linkage involves RRBs, Cooperative Banks AND Scheduled Commercial Banks (public and private) extending credit to SHGs after savings discipline is established. RRBs are particularly active in rural SHG financing. Source: NABARD SHG-Bank Linkage Annual Reports / Ministry of Rural Development NRLM.