Question

What is different between formal and informal source of credit

Answer 1

Hey Mate

Formal sources:

These sources of credit are registered by the government and have to follow its rules and regulations.

RBI supervises the functioning of formal sources of credit.

They generally charge lower rates of interest.

Their main motive is social welfare.
Example: Banks and cooperatives.

Informal sources

These include those small and scattered units which are largely outside the control of the government.

There is no organisation which supervises the credit activities.

They charge much higher rates of interest.

Their main motive is profit-making.
Example: Moneylenders, traders, employees, relatives and friends, etc

Answer 2

$\textbf{Answer is in Attachment !}$