During the annual grading of the 'Saraswati' Self Help Group (SHG), you find that although their savings are regular, four members have not attended the last five meetings. Additionally, the internal loan recovery rate is only 70% because the Secretary of the group has been lenient with her relatives. The group is asking for a second dose of credit of ₹5 lakh. As the credit officer, what should be your primary concern?

Evaluate the following seven statements regarding Self-Help Group (SHG) bank linkage and related guidelines in India: Statement 1: The RBI specifies that for bank linkage, an SHG must have been active for at least six months from its books, having held a minimum of 20 meetings and saved ₹10,000. If promoted by an NGO, a corporate guarantee from the NGO is mandatory. Statement 2: Interest rates for loans to SHGs are deregulated and determined by banks. Banks are prohibited from charging processing/inspection fees for loans up to ₹5 lakh. Statement 3: Direct bank credit to MFIs for on-lending to SHGs/JLGs is classified as Priority Sector Lending under Micro Enterprises. NBFC-MFIs face credit limit caps per borrower. Statement 4: Graduation of SHGs into Producer Companies registered under the Companies Act 2013 is promoted under NRLM to build scale and value-chain integration. Statement 5: All SHG members are mandated by law to receive free life/health insurance with premiums fully paid by the District Lead Bank's CSR fund. Statement 6: RBI guidelines state that banks should not insist on the physical presence of all SHG members at the branch for loan documentation or disbursement. Statement 7: Grading of SHGs for credit linkage uses the 'Panch Sutras' (Regular Meetings, Regular Savings, Regular Internal Lending, Regular Recoveries, and Maintenance of Proper Books of Accounts). Based on the statements above, which of the following represents the correct evaluation of which statements are accurate?