Social Science (087) — CBSE Class 10 board question

| Basis | Formal Sources | Informal Sources |
|---|---|---|
| Examples | Banks, cooperatives | Moneylenders, employers, traders, relatives |
| Supervision | Supervised by the Reserve Bank of India | No regulatory organisation; lend at any rate |
| Interest Rate | Lower (e.g., 8.5% p.a.) | Much higher (e.g., 36–60% p.a.) |
| Borrowers | Mainly richer households | Mainly poor households |
| Impact | Cheaper credit; supports development | High cost; can lead to debt trap |

Expanding formal sector credit is essential so that the poor are not forced to depend on expensive informal credit.

Source: Chapter 3 – Money and Credit, Formal Sector Credit in India

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• Examiners expect at least 3 clear points of distinction for 3 marks — one point per mark.
• A table format is the clearest way to present distinctions and is widely accepted in CBSE board exams.
• Key contrast points: supervision (RBI vs. none), interest rate, type of lenders, and who benefits.
• Avoid writing long paragraphs — crisp, parallel comparisons score better.
• The concluding line (about expanding formal credit) adds value but keep it brief.