Formal sources of credit include and .

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Detailed Solution

Formal sources of credit include banks and cooperatives. There are two types of sectors from which people can take loans: the formal and informal sectors. The formal or organised sector loan providers consist of banks, cooperatives, regional rural banks, land development banks, etc. These loan providers serve the people with loan facilities at a much cheaper rate than the informal sector. The only requirement the borrower has to fulfil while taking a loan from this sector is that they must have good creditworthiness and collateral. A borrower must also have the required documents, including the income statement.

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