Question

what is formal and informal credit​

Answer 1

Answer:

Formal credit:

• formal credit includes banks and co-operatives
• in this form of credit the rate of interest is less
• collateral security is very essential
• RBI supervises the functioning of in this form of credit

Informal credit:

• it includes money lenders,traders,relatives etc.
• the rate of interest is very high
• collateral security is not required
• there is no organisation that supervises informal source of credit.

Answer 2

Answer:

FORMAL SECTOR

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•We can get formal sector credit loans from Bank, LIC etc

•They are under the control of RBI

•If we don't pay the loan back the take legal action

•They give loan in reasonable interest

•Collateral is necessary

•This take more time for process

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INFORMAL SECTOR

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•We can get informal sector credit loans from Money lender, Trader, relatives etc

•They are not under the control of RBI

•If we don't pay back the loan they may take illegal action

•They give loan in high interest

•Collateral is not necessary ,it depends on the people's will and wish

•They actually don't take more time for the process

.___________________.

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Explanation: