Question

Why is formal source of credit better than yesterday informal source of credit

Answer 1

Formal sources of credit prefer over informal because final sources comprises of government organizations and collateral security, lower interest rates on its loans like co- operative bank & RBI but Informal sources comprises higher Interest on its loans does not provide collateral security & no organisation to ...

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Answer 2

Answer:

Formal source of credit is better than informal source due to following reasons :

1) Mode of repayment is more safe in formal source of credit than in informal source of credit

2) Formal source of credit include banks etc while informal include friends and rrlative

3) RBI supervise the formal source of credit

4) In informal source of credit borrower has to pay more interest as compare to formal source of credit

5) Formal source of credit is important

for country's development