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 sources of credit: These are institutions regulated by the government, ensuring fair lending practices.
- Commercial Banks and Government are formal sources as they follow legal procedures and offer fair interest rates.
- Landlords and Money Lenders are informal sources, often charging high interest rates without legal regulations.
Conclusion: The correct answer is \( \mathbf{(A)} \), as Commercial Banks and Government institutions are formal credit sources.