Chapter : 3. Money and Credit

Sectors Of Credit In India

Sectors Of Credit In India
1. Formal lender resources :
These include those resources which are controlled by the government. Banks and Cooperatives Bank falls in to the formal category. The rate of interest is very low.
2 . Informal lender resources :
These include money lenders, traders, relatives and friends.
Difference between formal and informal credit

Unequal distribution of formal sector loans :
Even after more than 50 years of independence most of rural and poor people still depend on non formal resources for their loan requirements. 85 % of the loan taken by poor house holds in the urban areas are from informal sources. The poor households have to pay a heavy price for borrowing.

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