Explain any three features each of formal sector loan and informal sectors loans
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Formal sectors loan
* Formal sources of credit are generally provided by banks and cooperatives.
* Interest rate for repaying loans is lower.
* RBI supervises the functioning of formal sources of loan and also ensures that these facilities should also be given to small cultivators and small borrowers.
Informal sectors loan
* Informal sources of credit are generally provided by moneylenders, traders, employers, relatives and friends.
* Interest rate for repaying loans is costlier.
* In informal sector no such organisation is there to supervise the credit activities of lenders that they used to charge higher rate of interests on loan.
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