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| 1. |
Describe the aources of formal and infrormal credit in india |
| Answer» Formal source of credit:(i) Loans that are given by banks and co-operative institutions are called Formal sector of credit.(ii) The functioning of these banks and co-operative institutions are supervised by Reserve Bank of India – RBI.(iii) These institutions are required to report to the RBI the rate of interest, amount lending, etc.(iv) Borrower is required to submit collaterals and documents.Informal source of credit:(i) Loans that are given by money lenders, friends and relatives are called Informal source of credit.(ii) They are not supervised by Reserve Bank of India – RBI.(iii) They can lend money at any interest rate and use any means to get back their money.(iv) Borrower is not required to submit collaterals and documents.\xa0 | |