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c) A is correct but R is wrong.
d) A is wrong but R is correct.

8 What are the two different sectors of credit? 2

9 Mention any two formal sources of credit? 2

10 Which are the two major sources of formal sectors in India? Why do we need to expand the form 3
of sources of credit?
11 What are the differences between formal and informal sources of credit? 3

13 The Reserve Bank of India supervises the functioning of formal sources of loans. For instance, we 4
have seen that the banks maintain a minimum cash balance out of the deposits they receive.
The RBI monitors the banks in actually maintaining cash balance. Similarly, the RBI sees that the
banks give loans not just to profit-making businesses and traders but also to small cultivators,
small scale industries, to small borrowers etc. Periodically, banks have to submit information to
the RBI on how much they are lending, to whom, at what interest rate, etc.
1. Who supervises the functioning of the formal sources of loan? 1
2. Why banks need to maintain a minimum cash balance out the deposits they receive? 1
3. Why RBI monitors the banks? 2
14 Explain why do banks and cooperative societies need to lend more in the rural India? 5