| Formal sources of Credit | Informal sources of Credit. |
| (a) RBI supervises the functioning of formal sources of credit. | (a) There is no organisation which supervises the credit activities of there sources. |
| (b) They charge lower rates of interest. | (b) They charge higher rates of interest. |
| (c) Their main motive is social welfare. | (c) Their main motive is profit- making. |
| (d) There loans are generally provided by banks and cooperatives. | (d) These loans are provided by money- lenders, traders,relative, friends etc. |
