Question

what are the disadvantages of informal credit
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Answer 1

Disadvantages of Informal Sector employment:-

• Little or no job security.
• Unprotected by labour laws.
• Odd working hours.
• No pension, insurance or health insurance scheme.
• Summary dismissals.
• Difficult to make any savings due to low wages.
• A brief illness or injury or injury can mean no financial means to survive.

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Answer 2

Drawbacks of informal sources of credit

• 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.

• 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.

Explanation:

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