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Distinguish between… (Class 10 Social Science 2025, Q26)

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Social ScienceCBSE Class 10 · Board exam 2025, set 32/5/1 · 3 marks · Short answer

CBSE Class 10 Social Science 2025: question 26

Set in the CBSE Class 10 board exam of 2025, paper 32/5/1, section C, question 26, for 3 marks. Try it first; the hints and our step-by-step solution are below.

Q26 · 3 marks · Short answerMoney and Credit

Distinguish between formal and informal sources of credit in India with example.

Source: official question paper from cbse.gov.in (PDF). See it in the full 2025 board paper, set 32/5/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Who regulates banks, and who regulates moneylenders?

Hint 2

Compare the interest rates and collateral.

Hint 3

Give one example of each type.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Supervision: The RBI supervises formal sources, whereas no one supervises informal sources.

    1 mark

  2. Collateral and cost: Formal sources require collateral and charge a low cost of borrowing. Informal sources need no collateral but charge a high rate of interest, and they may use unfair means to recover their money.

    1 mark

  3. Examples: Formal sources are banks and cooperatives. Informal sources are moneylenders, relatives, friends and traders.

    1 mark

Answer: Formal credit is supervised by the RBI, needs collateral and is cheap (banks, cooperatives). Informal credit is unsupervised, needs no collateral and is costly (moneylenders, relatives).

Where the marks are

  • Distinction on supervision (1 mark)
  • Distinction on collateral or cost of borrowing (1 mark)
  • Examples of both types (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Money and Credit, one at a time, marked against the answer key and marking points.Back to the full paper2025 board paper, set 32/5/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.