The various sources of loans can be categorised into two parts:

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Rural loans and urban loans

Current loans and fixed loans

Formal sector loans and informal sector loans

None of the above

answer is C.

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Detailed Solution

The various sources of loans can be categorised into two parts: formal sector loans and informal sector loans. Formal sector loans are given by regulated and organised sources like banks and cooperatives. At the same time, the informal sources of loans comprise friends, relatives, money lenders, employers, etc. Such loans are provided on fiduciary terms, i.e., based on trust. Unlike informal sources, there are a lot of formalities and conditions that need to be fulfilled for raising loans through formal sectors. That's why a large number of poor, uneducated households in India are dependent on informal sources, which are not only exploitative but also charge a very high rate of interest on borrowings.

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