Distinguish between formal and informal sector loans with example
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formal sector - the loan is taken under government with proper documentary work ex- banks, cooperative society
informal - the loan is not taken under the government without any documentary work ex- relatives, friends
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Formal Sector Loans: Include loans from banks and cooperatives. ... Informal Sector Loans : Include loans from moneylenders, traders, employers, relatives, friends, etc. Features for informal sector loans are: (i) Their credit activities are not governed by any organisation, therefore they charge higher rate of interest.
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