Question

Sources of credit formal and informal with examples

Answer 1

formal:- banks,etc.
informal:-moneylenders,relatives,etc.

Answer 2

Answer:

==============================================================

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.

Explanation: