How do SHGs help borrowers to overcome the problem of lack of collateral? Explain with an example.

Explanation

SHGs help borrowers to overcome the problem of lack of collateral in the following ways:
(a) It is the group that is responsible for the repayment of loans.
(b) Any case of non-payment of loan by any member is followed up seriously by other members.
(c) The formal sector is willing to lend to the members of SHGs because of their good track record of managing the credit.