The cost to the borrower of Informal loans is much higher than the Formal loans. Comment.

Dear student, The above statement is true as loans from informal sector charges higher rates of interest .There is no regulating body to fix the rates of interests and the motive is exploitation which leads to a higher cost for the borrowers . But loans from formal sectors are through proper institutions like banks and cooperatives which charges low rates of interest and always provide proper documentation which does not lead to exploitation. So, borrowers do not have to face a higher cost. Regards.