question_answer

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

Answer:

                  The differences between formal sources and informal sources of credit are

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 Sources	Reasonably low Banks and cooperative societies.	Very high Traders, moneylenders, land-owners, 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.