BANKING AFFAIRS

Detailed explanation-1: -The local moneylenders, relatives, friends and finance companies that grant a loan to the people in need at higher interest rates are informal lenders of credit.

Detailed explanation-2: -Informal sources may produce publications in the form of blogs, personal websites, and related “non-official” documents. For example, a retired professional football player may produce a blog about his health challenges since retirement, and some of that information may be related to head injuries.

Detailed explanation-3: -Cooperative society is not an informal source of credit but formal.

Detailed explanation-4: -Informal credit sector provides loan to small farmers in rural areas and for lower income groups and small scale enterprises in urban areas. Availing credit facility is very simple; non-bureaucratic and few written documents. Literacy is not a requisite. It carries a very high rate of interest.

Detailed explanation-5: -They are unorganized and do not have any contact with other sections of the banking industry. They combine money lending with trading and commission activities and thus introduce risk into their business. They do not distinguish between short-term and long-term finance and also in the purpose of the loans.