Chapter 3 · Question 5
Compare formal and informal sources of credit.
Q5
Compare formal and informal sources of credit.
Answer Revealed
Direct Answer:
Formal credit comes from banks and cooperatives and is supervised by the Reserve Bank of India. It usually has lower interest rates and written rules. Informal credit comes from moneylenders, traders, relatives, or employers and may charge high interest without strong regulation.
Simple Explanation
Formal credit comes from banks and cooperatives and is supervised by the Reserve Bank of India. It usually has lower interest rates and written rules. Informal credit comes from moneylenders, traders, relatives, or employers and may charge high interest without strong regulation.
Exam-Ready Structure
Formal credit comes from banks and cooperatives and is supervised by the Reserve Bank of India. It usually has lower interest rates and written rules. Informal credit comes from moneylenders, traders, relatives, or employers and may charge high interest without strong regulation.
Key Points
- Formal credit comes from banks and cooperatives and is supervised by the Reserve Bank of India.
- It usually has lower interest rates and written rules.
- Informal credit comes from moneylenders, traders, relatives, or employers and may charge high interest without strong regulation.