Loans from which of the following sources form a part of formal sector loans?

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Banks

Employers

Cooperatives

Both (1) and (3)

answer is D.

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Detailed Solution

Loans from banks and cooperatives are the sources that form a part of formal sector loans.
Banks and cooperatives are significant parts of the formal credit sector. The formal sector is the one that provides affordable loans at a low rate of interest, and the RBI also monitors the activities of this sector. This sector also strictly follows the terms of credit which were laid out. On the other hand, informal sector loans are loans from moneylenders, traders, employers, friends, and relatives. The RBI or any other organisation does not govern the credit activities of such lenders, and they charge a high-interest rate. The terms of credit are flexible but are not always followed diligently.

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