Sources of Loans

Q.

Why do we need to expand formal sources of credit in India?

Q. Identify the correct source of formal and informal credit.

1. Formal sector loans: Banks, cooperatives
   Informal sector loans: Employers, traders
2. Formal sector loans: Employers, traders
   Informal sector loans: Banks, cooperatives
3. Formal sector loans: Employers, cooperatives
   Informal sector loans: Banks, traders
4. Formal sector loans: Friends, relatives
   Informal sector loans: Banks, cooperatives

Q. How is borrowing from a moneylender different from banks?

1. Loans from banks is not supervised by any organisation.
2. Moneylenders charge a exhorbitant interest rate.
3. Moneylenders lend money without a collateral.
4. Banks verify various documents before lending money.

Q. Which of the following is not an example of loans from the informal sector?

1. Taking loan from ABC Finance Limited
2. Taking loan from a moneylender
3. Taking loan from your friend
4. Taking loan from your mother

Q. Choose the correct option related to sources of credit from the formal and informal sectors.

1. Formal: Banks, cooperatives
2. Informal: Local landlords, friends
3. Formal: Friends, cooperatives
4. Informal: Parents, banks

Q. Arnav was not able to get a loan from the bank as he lacked collateral. However, his neighbour lent him the required amount even without a collateral. If informal loans are readily available, then why are they not recommended?

1. Banks depend on loans for income.
2. Informal loans have very high rates of interest.
3. Informal loans lead to chances of harassment from borrowers.
4. Informal loans have no records of transactions.

Q. Rachita lends money to Priya. After a year, Rachita demands the repayment of the loan. However, Priya denies borrowing the loan. How should Rachita defend her claim and collect the money loaned?

1. Using the terms of credit
2. Using a witness
3. Using violence
4. Using friends

Q. Joel needs a loan of 1, 00, 000 rupees, which he can repay within a year. Suggest a suitable source of credit.

1. A loan from the local moneylender at 15% per annum.
2. A loan from the bank at 15% per annum.
3. A loan from the local moneylender at 13% per annum.
4. A loan from the bank at 25% per annum.