An example of hoe credit proved to be a boon or a bane.
- Credit from formal sources is useful.The formal sources of credit are the banks and the cooperatives. They are controlled by the Reserve Bank of India. The rate of interest at which the banks lend loans are also controlled. They involve collateral security, and various procedures which are time taking.
- Credit from informal sources in harmful.The informal sources of credit are the moneylenders, traders, employers, relatives and friends. No external organisations control the credit activities of lenders. The rate of interest can be really high as it depends on the wishes of the lender. They can also use unfair means to get their money back.