Choose the correct option in the context of given sentences.
Assertion. Self-help groups (SHGs) have emerged as an effective model for microfinance in India.
Reason. SHGs are able to pool resources and negotiate better loan terms with microfinance institutions.
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Both the assertion and the reason are true, and the reason correctly explains the assertion.
Self-help groups (SHGs) in India have proven to be an effective microfinance model by pooling members' savings and providing collateral-free loans with terms decided by the group at market-driven rates. This collective approach enables members to access credit more easily and negotiate better loan terms with financial institutions, thereby improving their financial stability and fostering economic empowerment.