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.
You need to login to perform this action.
You will be redirected in
3 sec