Question

what are the differences between shg providing loans and the cooperative providing loans ?

Answer 1

both r different because Cooperative is formal source of loans whereas shg
is informal source of loan some conditions r not same in both

Answer 2

Cooperatives

These are actually a group of people of same profession who pool their resources and share the benefit earned if we talk in context of Industries.

When we talk about credit, the pooled resources are given to members as credit and an interest is also charged which the borrower have to pay back.

Self Help Groups

Self help Groups are mainly the groups of rural women who saves money from their earnings and deposit it within the group. They can deposit money ranging from 25 rupees to 100 rupees.

The collected money is used to give loans to the members and an interest is also charged. After a period of time, when the savings of the group grows they become eligible to register in a bank. The account is made in the name of the group, not any member. The banks are interested to give loans to the self help Groups without collateral also because it is the responsibility of all the members of the groups to repay the loan and they help it's members to repay the loan to the banks. Shg also offer a platform for women to discuss issued related to health, domestic violence etc. in their regular meetings . SHGs also helps in women empowerment and give loans to members for generating self empowerment opportunities for these women or for repairing houses or releasing mortgaged land.

Difference

• The main difference between cooperatives and Self help Groups is that cooperatives are a group of Professionals usually belonging to same profession like farming. While self help Groups are the groups of rural women who belong to different occupations, they may be house maids, labourers etc.

• The resources pooled in cooperatives is large and of high value while the in SHGs the collection is small made from the wages of the poor women.

• The pooled resources in cooperatives are used in their industrial purpose like setting up a dal mill, sugar Mill etc or The resources are submitted in banks as collateral to avail for large loans. While the SHGs, as discussed above use the money to give loans to it's members for repairing their houses, generate self employment opportunities like tailoring, for releasing mortgaged land etc.

• Cooperative societies are formed so that these people can pool their resources, generate huge profits and share it among themselves and increase their incomes while SHGs are formed in places where banks are not easily available.