Differentiate between Institutional and Non-institutional sources of credit.
Answers
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Answer:
Explanation:
The following are some of the differences between the Institutional and Non-institutional sources of credit:
1. Institutional sources of credit involves loans provided by commercial banks such as RBI and SBI and by co-operatives whereas Non-institutional source of credit includes those which provide loan such as traders, moneylenders, commission agents, landlords and relatives.
2. Institutional sources of credit follow a set of proper systematic legal procedure before sanctioning the loans while in case of Non-institutional sources of credit there is absence of any particular set of systematic procedure and are more informal in nature.
3. The Rate of interest charged by the Institutional sources is far less than compared to the Non institutional sources . Under the Non institutional source people often fall prey to the exploitation of the person lending them.
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