Section
32
What points are to be kept in mind
regarding informal sector credit in India?
(5 Points)
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14
Answer:
Landlords, moneylenders, traders, relatives, friends and other sources of credit constitute the informal sector of credit. ... 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.
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Answer. (i) Most of the informal lenders charge a much higher interest on loans. Thus the cost to the borrower of the informal loans is much higher. (ii) Higher cost of borrowing means a larger part of earning of the borrowers is used to repay the loan and they have less income left for themselves.Sep 5, 2018
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