Distinguish between:
Non-institutional Sources of Agricultural Credit and Institutional Sources of Agricultural Credit.
Non-institutional Sources of Agricultural Credit | Institutional Sources of Agricultural Credit |
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(i) It includes money lenders, traders, landlords, commission agents, friends, and relatives, etc. | (i) It includes commercial banks, Regional Rural Banks (RRBs), Rural Cooperative Credit Institutions, etc. |
(ii) It is easy to obtain loans from non-institutional sources. The procedure is very simple and less time-consuming. | (ii) There are many formalities to obtain loans from institutional sources. The procedure is complicated and time-consuming. |
(iii) In this case, a very high (exorbitant) rate of interest is charged. | (iii) In this case, the rate of interest is low. |
(iv) There is no restriction on the use of loans taken from noninstitutional sources. | (iv) The loan provided by institutional sources is restricted to use for productive activities only. |