Unit 4 Ch 3 : Money and Credit — Social Studies STD 10 — Question

Some limitations of getting a loan from a informal source:
Costlier credit: High rate of interest charged by moneylenders and private financers.
No regulating authority: Unlike formal credit system where RBI regulates credit creation, informal sector is not regulated or checked by any authority and moneylenders exploit borrowers by charging high rates and using unfair means to retrieve their money.