Name two formal and two informal sources of rural credit in india. state any two advantages of formal source of credit
Answers
Formal source of credit are....
* Regional banks incorporate with SBI....
* NABARD system to provide credit facilities....
* Rural normal banks.....
Informal sources of credit...
* Landlords providing loans....
*Relatives mentioned....
*Moneylenders in villages....
**** Advantage of formal sources....
"" It creates less interest rate...
"" Govt assurity of time....
"" No burden of exploitation...
Formal source of credit:
(a) Loans that are given by banks and co-operative institutions are called Formal sector of credit.
(b) The functioning of these banks and co-operative institutions are supervised by Reserve Bank of India- RBI.
(c) These institutions are required to report to the RBI the rate of interest, amount lending, etc.
(d) Borrower is required to submit collaterals and documents.
Informal source of credit:
(a) Loans that are given by money lenders, friends and relatives are called Informal source of credit.
(b) They are not supervised by Reserve Bank of India - RBI.
(c) They can lend money at any interest rate and use any means to get back their money.
(d) Borrower is not required to submit collaterals and documents.