[very_short_answer] Unlike commercial banks, informal lenders such as moneylenders are not supervised by any…

Question

[very_short_answer] Unlike commercial banks, informal lenders such as moneylenders are not supervised by any regulatory authority. Identify ONE specific reason why bringing informal lenders under formal regulation is structurally difficult for the government.

Accepted Answer

## Model Answer Informal lenders like moneylenders operate in scattered, unorganised settings, keep no records of transactions, and are too numerous and dispersed for any regulatory body to effectively monitor or supervise. ## Explanation The source passage directly states that informal lenders "keep no records of transactions." Examiners expect you to link the structural difficulty to this lack of documentation/records and their dispersed, unorganised nature — not just say "there is no RBI for them" (that's the effect, not the structural reason). One precise reason is enough for 1 mark.

Social Science (087) — AI-generated practice question