RBI supervises the functioning of formal sector but there is no organization which supervises the functioning of informal sector.Formal sector provides cheap and affordable credit while informal sector charges a very high rate of interest.Formal sector needs documentation and collateral while informal sector don\’t need so.Mostly rich household take loans from formal sector and poor household takes loans from informal sector.Formal sector are mostly found in urban areas while informal sector are sources of loan in rural areas.Examples of formal sector are banks and cooperatives and examples of informal sector are moneylenders and relatives.Hope it helps you