Difference between formal and informal sector …
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Posted by Saurav Raj Roy 6 years, 11 months ago
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Yogita Ingle 6 years, 11 months ago
The formal sector provides only marginally more credit than the informal sector currently. The credit activities of the formal sector are supervised by the Reserve Bank of India. The RBI gives credit to all at low interest rates.
In the informal sector there is no supervisory body. The credit activities of this sector are only driven by profit with much higher interest rate. A high rate of interest means that a borrower spends more money to repay the loan and is left with less money for himself. This also leads to a debt trap.
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