How would you address the recipient of an informal letter?

The correct answer is Option (1) → My dear

An informal letter is written to family members, relatives and friends, so the salutation is warm and personal: My dear or Dear followed by the name or relation ("My dear Rahul", "Dear Mother").
Example: My dear Meena, I was delighted to get your letter.

Why the Other Options are Incorrect?

Option 2: Dear Mr/Mrs — Incorrect. A title with the surname is formal, used in letters to people one does not know closely.

Option 3: Dear Sir/Madam — Incorrect. This is the salutation of a formal letter to an official or an unknown person.

Option 4: Hello Sir/Madam — Incorrect. "Hello" is a spoken greeting, and "Sir/Madam" is formal; the mix is not used in letter writing.