Question

State any two difference between the formal lenders and the informal

lenders
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Answer 1

Answer:

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.

Explanation:

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Answer 2

Answer:

1. The formal sources of loans that the government registers are followed by laws and regulations.
2. Social welfare is the primary motive for formal sources.

1. The informal sources include all small and scattered units that are generally beyond the government’s control, they must obey its laws and regulation

2. The profit-making is the primary motive for informal sources.