Question

Explain two points of differences between formal and informal sources of credit.

Answer 1

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.