Question

Which of the following is considered an informal method of getting credit/finance ?
(A) Internet Banking
(B) Branch visits
(C) Going to money lenders
(D) Tele Banking
(E) All of these

Answer 1

(C) Going to money lenders.

The others are formal.

Answer 2

Going to money lenders is considered an informal method of getting credit/finance.

Option (C).

Explanation:

• This is considered an informal method of getting or receiving credit.

• Because the person borrowing is not involving any formal institutions like banks or other financial money-providing.

• But instead going to a third party consisting of money-lenders, by doing so they have no official ties with banks as their money is not being used in the economy and thus the individual doesn’t receive the credit.

• Instead while lending money the lender can add his own interest to the borrowed sum.

• Internet Banking, Tele-Banking and Branch visits unlike Borrowing Money from lenders are all formal methods of getting finance.

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