advanrages and disadvantanges formal sector of credit
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Formal sources of credit
Banks and cooperatives are the formal sources of credit.
Advantages
1. These institutions are regulated by the Reserve Bank Of
India. Their rates of interest for loans are controlled. The rates and terms
are fixed.
2. There is no exploitation by the lenders.
3. Everyone can take a loan that includes big businessmen as
well as the small cultivators or borrowers.
4. The cost of borrowing is usually less.
Disadvantages
1. The procedure to get the loan is time consuming.
2. They require collateral security.
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