define informal source of credit
Answers
Banks and cooperative societies constitute the formal sector of credit. Landlords, moneylenders, traders, relatives, friends and other sources of credit constitute the informal sector of credit. ... The RBI gives credit to all at low interest rates. In the informal sector there is no supervisory body.
Democracy also ensures that the government should not be made by the majority but it should have the representation of minorities as well
India is a secular country and it never tries to give undue preference to any language
Democracy is best form of government to accommodate social diversities if it must fulfills some basic conditions. They are:
Free and fair elections.
Majority rule should not be in terms of religion or race or linguistic groups.
The different sources of credit are:
Banks
Traders
Cooperative societies
Landlords
Moneylenders
Relatives and friends
Banks and cooperative societies constitute the formal sector of credit. Landlords, moneylenders, traders, relatives, friends and other sources of credit constitute the informal sector of credit.
The formal sector provides only marginally more credit than the informal sector currently. The credit activities of the formal sector are supervised by the Reserve Bank of India. The RBI gives credit to all at low interest rates.
In the informal sector there is no supervisory body. The credit activities of this sector are only driven by profit with much higher interest rate. A high rate of interest means that a borrower spends more money to repay the loan and is left with less money for himself. This also leads to a debt trap.