Question

Read the following sources of loan carefully and choose the correct option related to formal sources of credit:
(i) Commercial Bank
(ii) Landlords
(iii) Government
(iv) Money Lende

• A. (i) and (iii) are correct
• B. (ii) and (iv) are correct
• C. (i) and (ii) are correct
• D. (ii) and (iii) are correct

Hint:

Formal credit sources include banks and government schemes, while informal sources involve private lenders who may charge high interest rates.

Answer 1

The Correct Option is A

- Formal credit sources: These are government-regulated institutions that ensure fair lending.
- Commercial Banks and Government entities are formal sources because they adhere to legal procedures and offer equitable interest rates.
- Landlords and Money Lenders are informal sources, frequently imposing high interest rates without being subject to legal oversight.
Conclusion: The accurate response is \( \mathbf{(A)} \), since Commercial Banks and Government institutions function as formal credit sources.