Which of the following is a component of the SHG-bank linkage program in India?

Correct — D. The programme is named for the linkage between a self-help group and a bank, so the component the question is after is the one in which the bank itself is the lender.

NABARD launched it as a pilot in 1992, with Reserve Bank approval, to route formal bank credit to poor households that banks would not lend to one by one. The group's savings record substitutes for collateral.

The remaining choices describe things that happen around the programme — a subsidy, a training input, an intermediary lender — rather than the bank credit the linkage is named for.

Why the others are wrong

• (a)
  Microfinance institutions providing loans directly to SHGs — A microfinance institution lends on its own account and is regulated separately. Where an MFI appears inside the linkage it acts as an intermediary channelling bank funds, not as the lender the programme is built around.
• (b)
  State government providing subsidies to SHGs for credit — The linkage is a credit relationship, not a transfer. State subsidy schemes for groups run alongside it and are not the component being asked about.
• (c)
  Non-governmental organisations providing capacity building training to SHGs — NGOs act as self-help promoting institutions, forming groups and training them in book-keeping. That is promotion of the group, which is a step before the bank linkage rather than the linkage itself.

A self-help group is a small body, usually of 10 to 20 members from similar economic circumstances, that meets regularly and pools thrift before it seeks any credit.

The savings come first for a reason. A group that has saved together has a record a bank can read, and the loan is sanctioned against that record rather than against land or a guarantor.

NABARD's design allows more than one route to the same result: a bank may form and finance groups itself, or finance groups formed by an NGO, or lend through an intermediary. The bank as the source of funds is the constant across all of them.

Key facts

• NABARD launched the SHG-Bank Linkage Programme as a pilot in 1992.
• A self-help group is typically 10 to 20 members who pool savings before seeking credit.
• The bank's loan follows the group's savings record instead of individual collateral.
• NGOs that form and train groups under the programme are called self-help promoting institutions.

Common traps

• Choosing the NGO option because NGOs genuinely do form and train groups, which is promotion rather than linkage.
• Reading the programme as a grant or subsidy scheme when it is a credit relationship.

No directly related past PYQ was found.