Question

Mention the points of difference between formal sector and informal sector loans

Answer 1

 Formal sector loan is given by commercial bank whereas informal sector loan is given by money lenders, big merchants, etc. Formal sector loan required collateral where as informal sector loans does not require collateral. Formal sector loans has a low rate of interest where as informal sector loans has a very high rate of interest.

Hope it helps u.

Answer 2

❛Answer ❜

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Formal sector ↓

✍︎ Supervised by R.B.I

✍︎ Fixed + Low interest Rate

✍︎ e.g. Banks

Informal sector ↓

✍︎ No organisation supervises these credit activities

✍︎ High + no fix interest Rate

✍︎ e.g. Friends, traders, moneylenders, etc.

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