Question

Why should be the informal sector be discoraged?(credit)​

Answer 1

Informal sector of credit are always discouraged because of the following reasons:-

• Loans are given to us who we know already or whom we are familiar with.
• They may tend to do some tricky plays when they provide the loans.
• They do not have a fixed interest and they are of high rates than the formal sector as they all are money-minded.
• There is no supervision for the informal sector of credit. The lenders words are neglected by none.
• No collateral is required.
• Money-borrowers are caught into debt trap as they could not pay interest or the whole money of the existing amount.

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