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Explain the importance of formal sector loans in India.
Answer:
Points to Remember:
- Low-interest Rate
- Regulated by RBI
- No exploitation
Answer to be written:
- Formal sources of loans include Banks and cooperatives .
- Formal sector is regulated and monitored by the RBI and hence the interest rates and cost of borrowing are controlled and are less as compared to the informal sector.
- Unlike the informal source of loans, lenders in the formal sector do not exploit their borrowers and anyone can borrow from the formal sector from profitable businesses to small-scale enterprises and farmers .
(Any two points)
