Question

what are the merits of formal sector of cedit​

Answer 1

Formal sources of credit

Banks and cooperatives are the formal sources of credit.

Advantages

1. These institutions are regulated by the Reserve Bank Of

India. Their rates of interest for loans are controlled. The rates and terms

are fixed.

2. There is no exploitation by the lenders.

3. Everyone can take a loan that includes big businessmen as

well as the small cultivators or borrowers.

4. The cost of borrowing is usually less.

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