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Formal and Informal Credit

Sagar is a fa...

Question

Sagar is a farmer growing sugarcane in his field. He takes a loan of Rs. 30000 from a moneylender. What kind of credit does this fall under?

A

Formal

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B

Informal

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C

Both

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D

None

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Solution

The correct option is B Informal
Credit sources are of two types: formal and informal. Formal credit sources include banks, while informal sources include freidns, family, loan sharks, etc. The moneylender that Sagar takes the loan from falls under the informal source of credit.

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