Solution:
Moneylenders are not a formal source of credit.Moneylenders, traders, relatives, and friends are informal lenders. Poor borrowers, like small farmers and people willing to start small businesses, depend upon informal sources of credit as they do not possess collateral. Collateral is an asset owned by the borrower which is used as a guarantee to the lender until the principal amount of the loan along with the interest on it is repaid. The moneylenders charge higher interest on the loans they provide and do not maintain proper transaction records. They use harsher means to retrieve the loan from the borrowers, and the borrowers have to take another loan to repay the previous loan.
