Question

Krishna is working in a neighboring field with very less wages. Expenses
on sudden illnesses or functions in the family are also met through loans.
The landowner charges an interest rate of 5 percent per month. At
present she owes the landowner 5,000.
Analyse the credit arrangements given above. /
P.T.O.
1​

Answer 1

Answer:

Explanation:

Informal credit

Answer 2

Informal Sources of Credit

Explanation:

• Informal credit operations involve lending, generally at short-term, amongst  relatives, friends, landlords, kin members, shopkeepers, neighbours,  artisans, farmers, village moneylenders, marketing intermediaries, itinerant traders, other local income groups.
• Informal loans include various conventional non-institutional forms of loan accumulation and extending credit. Although informal credit markets exist in urban areas, the term generally applies to rural, informal credit markets where there is no institutional loan or inadequate to meet the needs of local professionals.
• No state or private entity is involved in handling or controlling the credit activities carried out by informal sources. The credit terms are adjustable for the personal benefit of the borrowers. They typically charge higher interest rates and use the customers to support themselves.