groups are the formal sector and the informal sector.
Features of the formal sector are
(i) It consists of banks and
cooperatives, which are supervised by the RBI.
(ii) They give loans on low interest rates.
(iii) Usually the loans require extensive documentation and
some property to be kept as collateral or security against any default in
Features of the informal sector are
(i) It consists of moneylenders,
traders, employers, land-owners etc which are not supervised by any organisation.
(ii) They usually give loans at a high interest rate, which means that
the cost of the loan is very high to the borrower.
(iii) Usually the informal sources do not require
extensive documentation for giving the loan.
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