question_answer 1)

What are the differences between formal and informal sources of credit?  

Answer:

 

Points on Which Different	Formal Sources of Credit	Informal Sources of Credit
Borrower's capability	Richer people having assets which can be pledged as collateral	Poorer people not having assets which can be pledged
Rate of interest	Reasonably low	Very high
Sources	Banks   and   co-operative societies	Traders,moneylenders, landowners, etc
Action on default of payment	Collateral can be confiscated and sold to recover the loan	Borrowers can be made as bonded labourers or made to part with land owned by them