Question

Which of the following is the source of non-institutional finance?

• A. Regional Rural Bank
• B. Land Development Bank
• C. Moneylender
• D. Cooperative Bank

Hint:

Non-institutional sources include moneylenders, traders, and relatives, whereas institutional sources include commercial and cooperative banks.

Answer 1

The Correct Option is C

The given question asks us to identify the source of non-institutional finance from the options provided. Let's analyze each option to determine the correct answer.

• Regional Rural Bank: Regional Rural Banks (RRBs) are government-owned scheduled commercial banks that provide institutional credit to rural and semi-rural areas. They aim to provide banking services to the unbanked and help in agriculture and rural development.
• Land Development Bank: Land Development Banks are part of a cooperative system aimed at providing long-term credit for agricultural developments. They are institutional sources that serve the needs of farmers.
• Moneylender: Moneylenders are private individuals or groups who lend money at interest rates. They are considered a source of non-institutional finance as they are not regulated by financial institutions or the government. Their lending practices are informal and often unregulated, making them distinct from institutional sources.
• Cooperative Bank: Cooperative Banks are institutional sources that provide financial assistance to their members. They operate on a cooperative model and are regulated under cooperative society laws.

The correct answer is Moneylender as they operate outside the official banking system, providing informal and often immediate credit solutions in rural and urban settings. They belong to the category of non-institutional finance.

Conclusion: Moneylenders are classified as non-institutional finance sources due to their informal operation and absence of regulation by governmental banking institutions.