Question

Describe any two sources of formal and informal credit in india

Answer 1

the loan extended by the banks or the other financial institutions is callled formal credit.this kind of credit is generally less andd is paid in installments.such formal credits by financial institutions is under supervision of the reserve bank of India.the r.b.I controls and checks the method of payment,period of credit,interest rate etc. the informal method of credit is when the credit od borrowed by friends,rellatives or money lenders. this informal credit method is difficult becausse there is no regulation in regard to the interest paid.they charge more rare of interest than a person's income.it becomes very difficult for the borrower.

Answer 2

Answer:

Hy dear here is your answer

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Formal sources:

(i) They follow those sources of credit, which are registered by the government and have to follow its rules and regulations.

(ii) RBI supervises the functioning of formal sources of credit.

(iii) They generally charge lower rates of interest.

(iv) Their main motive is social welfare.

Example: Banks and cooperatives.

Informal sources:

(i) These include those small and scattered units which are largely outside the control of the government.

(ii) There is no organisation which supervises the credit activities.

(iii) They charge much higher rates of interest.

(iv) Their main motive is profit-making.

Example: Moneylenders, traders, employees, relatives and friends, etc.

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Explanation: