Question

Write five feature of informal loan sector

Answer 1

Answer:

(i) Their credit activities are not governed by any organisation, therefore they charge higher rate of interest. (ii) Informal sector loan providers know the borrowers personally, and hence they provide loans on easy terms without collateral and documentation. (iii) Rates of interest are not fixed. Moneylenders can charge whatever interest rate they choose. (iv) There is no one to stop them from using unfair means to get their money back.

Explanation:

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