Question

explain in detail the two different credit situation with examples.

Answer 1

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Credit situation can be divided into two categories:
1. Formal sector- It includes banks and cooperative that extends loans to household for entrepreneurship and other personal needs . The rate of interest are charged by them is low.
2.Informal sector - It includes moneylenders traders employers relatives and friends .The moneylenders generally charge at a high rate

Answer 2

Answer:

Credit arrangements can be divided into two categories. These are as follows:

i) Formal Sector- It includes banks and cooperatives that extend loans to households for entrepreneurship and other personal needs. The rates of interest charged by them are low.

ii) Informal Sector- It includes moneylenders, traders, employers, relatives and friends. The moneylenders generally charge at a higher rate of interest.