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

  • 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.


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