| Formal sources of credit | Informal sources of credit |
|---|---|
| These are loans from banks and cooperatives. | These include moneylenders, traders, employers, relatives and friends. |
| The Reserve Bank of India supervises the functioning of formal sources of loans. | There is no control or supervision. |
| They offer structured lending products with defined terms, conditions, and repayment schedules. | Terms and conditions vary according to the lenders' wish. |
| The terms are fixed and do not change from person to person. | Informal sources often offer flexible terms as per the need of borrower. |