The various types of loans can be conveniently grouped as formal sector loans and informal sector loans. The RBI supervises the functioning of formal sources of credit in India, The RBI monitors the banks in maintaining cash balance. Similarly, the RBI sees that the banks give loans not just to profit making businesses and traders but also to small cultivators, small scale industries etc. There is no such organisation which supervises the credit activities of lenders in the informal sector. They can lend at what ever interest rate that they choose. Cheap and affordable credit is crucial for the country's development. Thus, it is necessary that banks and cooperatives increase their lending particularly in the rural areas, so that the dependence on informal sources of credit reduces.
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The various types of loans can be conveniently grouped as formal sector loans and informal sector loans. The RBI supervises the functioning of formal sources of credit in India, The RBI monitors the banks in maintaining cash balance. Similarly, the RBI sees that the banks give loans not just to profit making businesses and traders but also to small cultivators, small scale industries etc. There is no such organisation which supervises the credit activities of lenders in the informal sector. They can lend at what ever interest rate that they choose. Cheap and affordable credit is crucial for the country's development. Thus, it is necessary that banks and cooperatives increase their lending particularly in the rural areas, so that the dependence on informal sources of credit reduces.
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