The formal sources provide loan only for productive purposes, whereas the informal sources provide credit for productive and non-productive purposes.

What does these line means!!!!!

It means the formal sectors like Banks which are registered under laws mostly give loans for productive purpose that is where production takes place.Some of these productive sectors are agriculture where cultivators borrow loans,small scale industries etc.Where as Informal sectors like money lenders,relatives,landlords are the main sources of informal credit which give borrowers credit for any type of work at higher interests.