Solution

Self Help Groups (SHGs) and non-governmental organisations (NGOs) that offer loans and other financial services to the underprivileged are referred to as providing micro credit. By encouraging rural households to save money, the Self Help Groups are playing a critical part in helping the impoverished fulfil their credit needs. To provide for the financial needs of the SHGs' needy members, many farmers combine their private funds. These groups' participants have ties to the banks. In other words, SHGs provide the weak person the opportunity to become stronger as a member of a group. Additionally, SHG financing lowers transaction costs for both lenders and borrowers.
A significant part of providing loans at particularly discounted rates was played by the National Bank for Agricultural and Rural Development (NABARD). More than seven lakh SHGs are now working in various rural regions. Due to its informal credit distribution system and minimal legal requirements, SHGs' programmes are growing in popularity among small and vulnerable borrowers.