Question

How can formal sector explain its activities of credit?

Answer 1

Answer:

The credit activities of the formal sector are supervised by the Reserve Bank of India. The RBI gives credit to all at low interest rates. In the informal sector there is no supervisory body. The credit activities of this sector are only driven by profit with much higher interest rate.

Explanation:

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Answer 2

Answer:

Banks and cooperative societies constitute the formal sector of credit. Landlords, moneylenders, traders, relatives, friends and other sources of credit constitute the informal sector of credit.

The formal sector provides only marginally more credit than the informal sector currently. The credit activities of the formal sector are supervised by the Reserve Bank of India. The RBI gives credit to all at low interest rates.

Explanation:

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