|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|
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