Review Any Three Merits and Any Two Demerits of ‘Formal Sector of Credit’ in India.

Merits of formal sector credit in India:

  1. It provides cheap and affordable credit.
  2. Due to low cost of borrowing, the borrowers have to repay less and they will have more saving.
  3. The loan activities of the formal sector is supervised by the RBI.

Demerits of formal sector credit in India:

  1. Mostly people in the urban areas and the well-off households use it.
  2. Formal sector credit need proper documents and collateral before lending.

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