FORMAL SOURCE OF CREDIT
informal source of credit: Loans that are given by money lenders, friends and relatives are called Informal source of credit.
The functioning of these banks and co-operative
institutions are supervised by Reserve Bank of India – RBI.
These institutions are required to report to
the RBI the rate of interest, amount lending, etc.
Borrower is required to submit collaterals and documents.
INFORMAL SOURCE OF CREDIT
Loans that are given by money lenders, friends
and relatives are called Informal source of credit.
They are not supervised by Reserve Bank of
India – RBI.
They can lend money at any interest rate and
use any means to get back their money.
Borrower is not required to submit collaterals
and documents.