Which of the following is the compelling factor that produced a very high repayment rate of 98% in the concept of lending to groups of poor women, initiated by Dr Yunus?

Question

Question

This question was previously asked in

SSC CHSL Exam 2023 Tier-I Official Paper (Held On: 09 Aug, 2023 Shift 1)

Answer 1

The correct answer is Joint liability putting social pressure to repay loans.

Key Points

Joint liability:-
- It means that all members of a group are responsible for each other's loans.
- Therefore, if one member defaults on a loan, the other members are responsible for repaying it. This puts social pressure on the group to repay loans on time.

Additional Information

In the concept of lending to groups of poor women, initiated by Dr Yunus, joint liability was used as a compelling factor to ensure a high repayment rate.
The removal of a defaulter from the group may seem like a viable solution, but it does not address the root cause of defaulting on loans. Moreover, it may lead to social ostracization of the defaulter, which is not desirable.
Involvement of 'loan sharks' and the use of the services of aggressive loan recovery agents (option 4) are illegal and unethical means of recovering loans. They do not address the root cause of defaulting on loans and may lead to further indebtedness of borrowers.