(i) These sources of credit are registered by the government and have to follow
its rules and regulations.
(ii) RBI supervises the functioning of formal sources of
(iii) They generally charge lower rates of interest.
(iv) Their main motive is social welfare.
Example: Banks and cooperatives.
(i) These include those small and scattered units which
are largely outside the control of the government.
(ii) There is no organisation which supervises the credit
(iii) They charge much higher rates of interest.
(iv) Their main motive is profit-making.
Example: Moneylenders, traders, employees, relatives and
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