Question

Compare formal sector loans with informal sector of loans regarding interest only

Answer 1

Formal sector loans offer reasonable and cheap rate of interest while the informal sector loans offer very high rate of interest which is difficult to pay back.

Answer 2

In Formal sector loans, the rate of interest is low while on the other hand the rate of interest in Informal sector is high.

In Formal sector, the rate of interest is fixed by Reserve bank of India which supervise its functioning while as in Informal sector, there is no such organization which fixes the interest of loans or supervises its functioning.

In Formal sector, the interest is regular one but it may or may not be in Informal sector.