10th Class Social Science Money and Credit Question Bank 10th CBSE Social Science Money and Credit

  • question_answer Compare and contrast the role of formal and informal sour up of credit

    Answer:

                    These 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 payment. 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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