What is the difference between the bank loan and through SHG?

Bank loan advances the loan by mortgaging any property as collateral, but SHG advances their loan without any collateral. Both are the formal sources of credit, but the advancement procedure and working of the system is different. Bank accept the deposit from the depositors and advance that amount keeping a fraction of ratio as a reserve they advance that amount as loan. The members of the organization save their money by fixing an amount to be deposited weekly, the amount will be such everyone can afford that. That deposited money can be advanced as a loan to any of the member in the group who is actually in need of it, but the loan will be advanced by the consent the group members.

Banks works as a formal organization which is registered, but the SHG can be with registered or unregistered. The rules in the banks make the loan procedure rigid whereas the SHGs give loans to the members itself and without any rigid procedures.