CBSE Class 10 Social Science 2023 Set 1 Outside Delhi Paper

Question : 27 of 37

Marks: +1, -0

Distinguish between formal and informal sources of credit.

Solution:

The differences between formal and informal sector of credit are as under:

Formal sector of credit	Informal sector of credit
RBI monitors the formal sector of credit	There is no organisation which supervise the credit activities of lenders.
They charge a normal interest rate on loans.	They can lend at whatever interest rate they choose.
E.g., Banks and cooperative societies.	E.g., Local moneylenders, traders and relatives etc.

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