Question

Which are the two major sources of formal loan for rural households? ​

Answer 1

Answer:

The sources of credit are divided into 2 types ,these are:

1: Formal sources: These sources include banks,cooperatives,government resources etc..These work under government under supervision of the RBI.RBI ensures whether they maintain their cash reserve ratio and give credit to both rich and poor.

They charge reasonable interest.Most of well off people take credit from these sources

2: Informal sources:These sources include relatives,friends,professional money lenders.

They charge high interest.

Most rural people take credit from them.

They don't follow any kind of rules.

Formal sources are better than informal.

Hope it is a good answer.