What are the sources of credit of urban house hold in india? Explain all points in three to five lines
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Sources of credit for urban households in India :-
There are two types of sources from which the urban households can avail
credit facility. These are formal sector and informal sector.
Formal Sector :
People can borrow money from different sources of credit in formal sector such as banks, cooperative institutions. The loan given by banks and cooperative institutions constitutes 'Formal Sector' of credit. The functioning of these financial institutions is supervised by the Reserve bank of India.
Informal Sector :
The loans obtained from money lenders, relatives, friends etc. constitutes the 'Informal sector' of credit. They can lend money at any rate of interest and adopt any means to recover back their money. They charge a much higher rate of interest than the lenders in the formal sector. There is no supervision from a regulatory body like RBI to enforce discipline of lending practices in the formal sector.
There are two types of sources from which the urban households can avail
credit facility. These are formal sector and informal sector.
Formal Sector :
People can borrow money from different sources of credit in formal sector such as banks, cooperative institutions. The loan given by banks and cooperative institutions constitutes 'Formal Sector' of credit. The functioning of these financial institutions is supervised by the Reserve bank of India.
Informal Sector :
The loans obtained from money lenders, relatives, friends etc. constitutes the 'Informal sector' of credit. They can lend money at any rate of interest and adopt any means to recover back their money. They charge a much higher rate of interest than the lenders in the formal sector. There is no supervision from a regulatory body like RBI to enforce discipline of lending practices in the formal sector.
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