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CS Professional · CSR and Social Governance · Contribution of Non-Corporate Entities in Social Governance

A bank is financing SHGs under the SHG-Bank Linkage approach. Group Sunrise, with 15 members, has run regular savings and internal lending for over six months, keeps up-to-date books and holds weekly meetings with high attendance. Which step is the logical next one in this linkage model?

The bank can open a savings account in the group's name and then sanction credit linked to its savings and repayment record. Under SHG-Bank Linkage, a stable, well-documented group is financed as a unit, without needing conversion into a company or trust.

  1. AThe bank opens a savings account in the group's name and may sanction credit linked to its savings and track recordCorrect
  2. BThe group must first convert into a public limited company
  3. CThe bank must lend only to individual members, ignoring the group
  4. DThe group must wait for registration as a trust before any bank account is opened

Explanation

In SHG-Bank Linkage, a group that shows sustained thrift, internal lending and good record keeping is treated as a unit: it can hold a savings bank account and later receive credit, often a multiple of its savings. Conversion into a company or trust is not required, and lending is to the group.

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