Question

Mention any two formal and two informal sources of credit

Answer 1

Answer:

1. Non government soutmrces such as friends. For formal

2. Moneylenders, traders are one among the informal sources of credit

3.There is no organisation which supervises the credit activities of the lenders in informal sectors.

4. Traders are sources among formals.

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Answer 2

Hy dear here is your answer :

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Formal sources:

(i) They follow those sources of credit, which are registered by the government and have to follow its rules and regulations.

(ii) RBI supervises the functioning of formal sources of credit.

(iii) They generally charge lower rates of interest.

(iv) Their main motive is social welfare.

Example: Banks and cooperatives.

Informal sources:

(i) These include those small and scattered units which are largely outside the control of the government.

(ii) There is no organisation which supervises the credit activities.

(iii) They charge much higher rates of interest.

(iv) Their main motive is profit-making.

Example: Moneylenders, traders, employees, relatives and friends, etc.

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