Question

what is formal and informal sector lone?

Answer 1

Formal sector loans are those which are given by banks and authorized institutions.
Informal sector loans are those given by moneylenders,land lords,friends,etc.

Answer 2

FORMAL SECTOR LOAN -: a loan taken from a bank is called formal sector of loan in a low interest rate but it requires any collateral such as property papers and assets.
INFORMAL SECTOR LOAN -: a loan taken from a landowner relative or a friend or any other person is called informal sector of loan. it doesn't need any assets but it has a high interest rate. if the borrower is not able to pay loan he is caught in a debt trap.
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