features of formal source of credit mention 5 features
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It's provided by banks and cooperatives.
Reserve Bank of India regulates the functioning of the formal sources of credit like the interest rate
The banks have to give RBI all the information regarding the lending processes as well as the borrowers.
RBI ensures that the loans are being provided to small cultivators, business men and workers too. Informal Credit:
It includes moneylenders, traders, relatives, employers, friends etc.
No organization controls the informal sources
The interest rate is decided as per the lender's interest and there is no check on the unfair means used to get the money back
Most of the times, lenders are poor farmers who fall into debt traps.
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