Formal sources of credit work under supervision of Reserve Bank of India but informal sources of credit don\’t work under the government organisations.Formal sources of credit charges very low rate of interest but in formal charges very high rate of interest.formal sources follow the rules and regulations formed by the government but informal sources don\’t follow any rules and regulations of government.Commercial bank cooperative society etc. are the main source of formal credit. And relatives, landlords, money lenders are main source of informal credits.
Formal – low interest informal – high interest
Formal – from banks informal – from friemds and relatives