Sources of credit are

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Formal sources

Informal sources

RBI

Both 1 and 2

answer is D.

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Detailed Solution

Sources of credit are Formal and informal. Sources of credit are available both in urban and rural areas. However, most of the time, the poor suffer from the informal sector while the wealthy benefit from the formal sector.
1) Formal source of credit: Banks and cooperative societies are the most significant sources. The RBI regulates and manages these sources. The banks must provide the RBI with all information related to the lending procedures and the borrowers. RBI ensures that small farmers, entrepreneurs, and employees are all given access to credit. Generally, for productive purposes, loans are granted. The rate of interest is low in traditional sources.
2) Informal source of credit: It includes moneylenders, traders, relatives, employers, friends, etc., who provide loans. With high-interest rates, loans are given for both productive and non-productive purposes. No organisation controls the informal sources.

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