Question

describe the pattern of formal and informal source of credit in urban areas?

Answer 1

Answer:

RBI dominates the functions of formal sources of credit but in informal sources there is no organisation that dominates the credit activities. Formal sources usually charges lower rates of interest whereas in informal sources they charge much higher rates of interest.

Answer 2

Answer:

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Hy dear here is your answer

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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