| Loans through the banks | Loans through the SHGs |
| 1. Bank loans require proper documents and collateral. | 1. Collateral usually kept by banks is not necessary. |
| 2. Banks sanction loans to all sections of people. | 2. SHGs generally sanction loans to rural poor, especially women. |
| 3. Loans are generally sanctioned in the name of the individuals. | 3. SHGs sanction loans in the name of the group. |
| 4. Bank loans are generally for many purposes. | 4. These loans are meant to create self employment opportunities for the members. |
| 5. Recovery of the loan is difficult in case if the individual fails to repay the loan. | 5. All the group members are jointly responsible for the repayment of the loan. Hence recovery of the loan is easy. |
