Question

distinguish between formal source of credit and informal sources of credit

Answer 1

FORMAL-
1)Includes banks, cooperatives etc
2)Charges very low interest rate.
3) Requires documental work and
collateral.
4) doesn't give another loan if
previous one is pending.
5) Mostly taken by rich households

INFORMAL-
1)Includes moneyelenders, landlords etc.
2)Charge ver high interest rates
3)Doesn't require collateral at times.
4)Can take another loan without paying the previous one.
5)Mostly taken by poor households.

Answer 2

FORMAL-

1)Includes banks, cooperatives etc

2)Charges very low interest rate.

3) Requires documental work and

collateral.

4) doesn't give another loan if

previous one is pending.

5) Mostly taken by rich households

INFORMAL-

1)Includes moneyelenders, landlords etc.

2)Charge ver high interest rates

3)Doesn't require collateral at times.

4)Can take another loan without paying the previous one.

5)Mostly taken by poor households.