Which of the following organizations supervises the functioning of the informal sources of loans?
Answer & explanation
Correct answer: option 4
There is no organisation which supervises the credit activities of lenders in the informal sector. They can lend at whatever interest rate they choose. There is no one to stop them from using unfair means to get their money back. Compared to the formal lenders, most of the informal lenders charge a much higher interest on loans. Thus, the cost to the borrower of informal loans is much higher. So, we can say that option 4 i.e. none of the above is the correct answer.