Question

What is the formal sector and informal sector of credit . Distiguish between formal and informal sector credit

Answer 1

INFORMAL CREDIT is money which people lend from informal sources like local money lenders n relatives . it is mostly prefered in rural areas bcoz people are that literate n could manage documentation.
it is unsecure form of credit . money lenders could take an advantage of poor farmers by cheating or imposing high interest

FORMAL CREDIT is the money lended from formal sector like banks and authorised lending companies. they are more secure. include proper documentation. and also provide difrnt schemes for poor families. they offer low intrest

Answer 2

Answer:

1. 85% of the loans taken by poor households in the urban areas are from informal sources.

2. Urban households take only 10% of their loans are from informal sources, while 90% are from formal sources.

3. The rich households are availing cheap credit from informal lender whereas the poor households have to pay a large amount of borrowing.

4. The formal sector still meets only about half of the total credit needs of the rural people.

5. The remaining credit needs are met from informal sources.

6. Thus, it is necessary that banks and cooperatives increase their lending particularly in the rural areas so that the dependence on informal sources of credit reduces.

7. While formal sector loans need to expand, it is also necessary that everyone receives these loans.

8. It is important that the formal credit is distributed more equality so that the poor can benefit from the cheaper loans.

hope this helps u mate

mark me as brainlist