The formal sources of credit are

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Moneylenders

Banks

Cooperatives

Both (2) and (3)

answer is D.

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Detailed Solution

The formal sources of credit are banks and cooperatives.
The formal sources of credit in India are banks ( government and private banks) and cooperative societies. These financial institutions charge a lower rate of interest on loans than other sources of credit. It is necessary to expand formal sources of credit, especially in rural areas, because informal sources of credit exploit people by charging them high-interest rates. Thus, people fall into the debt trap. The process of availing of loans from formal sources of credit is efficient and quick. As a result, an expansion of traditional sources of recognition is required to encourage people to use a more ethical loan process.

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