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Which sector is best for loan and why ?My work |
| Answer» Formal sectorreasons:FORMAL\xa0sector loan include banks and cooperatives whereas, the informal lenders includes money lenders, traders, employees, relatives and friends.\tThe Reserve Bank of India supervises the functioning of formal sources loans but there is no organisation which supervises the credit activities of lenders in the informal sector.\tCompared to the formal lenders, most of the informal lenders charge much higher interest on loans.\tFormal sources of loan are less risky. They do not use unfair means to get their money back whereas, informal lenders use different crucial methods to get their money back.\tBanks require documentation and collateral whereas, the loans from informal sources do not require any such collateral. | |