Question

Difference between the formal and informal sector loans

Answer 1

❤FORMAL SECTOR LOAN:

1.They are supervised by the Reserve bank of India. 
2.These consists of loans from banks and cooperatives. 
3.It provides loans at fixed rate and terms. 

❤INFORMAL SECTOR LOANS:

1.They are not supervised by RBI. 
2.They get loans from moneylenders, relatives, friends.... 
3.It does not provide loan at fixed terms. 
4.It gives loans only for making profits. 

Answer 2

Formal sector are given from banks or cooperatives, informal from money-lenders, friends, family etc.

Formal sectors are supervised by RBI, no organization for informal.

Formal have low interest rates, informal have high interest rates.

Formal have public welfare motive, informal have profit making motive.

Formal don't exploit people, informal exploit poor borrowers.

Formal require collateral and documentation, informal don't require.

Hope it helped!