The interest rate charged by the formal sector is

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High as compared to the informal sector

Low as compared to the informal sector

Equal to the informal sector

None of these

answer is B.

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Detailed Solution

The interest rate charged by the formal sector is low compared to the informal sector. Banks and cooperative organizations make up the bulk of the legal industry. They are under the Reserve Bank of India's supervision, and they are required to keep interest rates low so that not only the wealthy segment of society but also the tiny and middling segment can obtain loans from banks and meet their needs. And because the informal sector is not registered with the government and is therefore not supervised by any organization, there is a critical need to expand the formal sector in rural areas.

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