Which sector is best for loan …
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Posted by Bhawesh Naik 5 years, 2 months ago
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Gaurav Seth 5 years, 2 months ago
Formal sector
reasons:
FORMAL sector loan include banks and cooperatives whereas, the informal lenders includes money lenders, traders, employees, relatives and friends.
- The Reserve Bank of India supervises the functioning of formal sources loans but there is no organisation which supervises the credit activities of lenders in the informal sector.
- Compared to the formal lenders, most of the informal lenders charge much higher interest on loans.
- Formal sources of loan are less risky. They do not use unfair means to get their money back whereas, informal lenders use different crucial methods to get their money back.
- Banks require documentation and collateral whereas, the loans from informal sources do not require any such collateral.
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