Institutional vs Non-Institutional Credit Quiz

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Questions and Answers

What is a characteristic of non-institutional credit?

  • Known as formal credit
  • Regulated by the RBI
  • Info: Non-institutional credit is generally very expensive because it remains unregulated by the RBI.
  • Provided by moneylenders, traders, and relatives (correct)
  • Mainly provided for productive purposes

What is a characteristic of institutional credit?

  • Known as informal credit
  • Regulated by the RBI (correct)
  • Provided for productive purposes as well as nonproductive purposes
  • Generally very expensive
  • Info: Institutional credit is provided by banks, cooperative societies, etc. and is regulated by the RBI.

What is a role of self-help groups (SHGs) in rural credit?

  • Provide credit at high interest rates
  • Info: SHG’s promote thrift amongst the rural households and offer credit without collateral at moderate interest rates.
  • Operate without systematic legal procedures
  • Promote thrift amongst rural households (correct)
  • Require collateral for loans

Why is non-institutional credit generally very expensive?

<p>It remains unregulated by the RBI (C)</p> Signup and view all the answers

What distinguishes institutional credit from non-institutional credit?

<p>Institutional sources have proper systematic legal procedure while giving loans (C)</p> Signup and view all the answers

Which of the following is a characteristic of non-institutional credit?

<p>It is generally provided by moneylenders and traders (A)</p> Signup and view all the answers

What distinguishes institutional credit from non-institutional credit?

<p>Institutional credit is also known as formal credit (B)</p> Signup and view all the answers

What is a role of self-help groups (SHGs) in rural credit?

<p>SHGs promote thrift amongst rural households and provide micro credit (C)</p> Signup and view all the answers

Why is institutional credit generally preferred over non-institutional credit?

<p>It is regulated, has lower interest rates, and systematic legal procedures (A)</p> Signup and view all the answers

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<p>What distinguishes institutional credit from non-institutional credit? (A)</p> Signup and view all the answers

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