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Differentiate between… (Class 10 Social Science 2026, Q36)

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Social ScienceCBSE Class 10 · Board exam 2026, set 32/1/1 · 3 marks · Short answer

CBSE Class 10 Social Science 2026: question 36

Set in the CBSE Class 10 board exam of 2026, paper 32/1/1, section D, question 36, for 3 marks. Try it first; the hints and our step-by-step solution are below.

Q36 · 3 marks · Short answerMoney and Credit

Differentiate between formal and informal sources of credit.

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 32/1/1.

Hints

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

Hint 1

Think of who regulates each source.

Hint 2

Compare interest rates and what happens when borrowers cannot repay.

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 (banks, cooperatives). No agency supervises informal sources (moneylenders, traders, relatives, employers).

    1 mark

  2. Interest rate and cost: Formal sources charge a low interest rate, so the cost of borrowing is low. Informal sources charge a much higher rate, so the cost is high.

    1 mark

  3. Debt trap: The chance of a debt trap is low with formal credit, but high interest in informal credit may lead borrowers into a debt trap.

    1 mark

Answer: Formal credit is RBI-supervised, cheaper and has a low debt-trap risk; informal credit is unsupervised, costly and risks a debt trap.

Where the marks are

  • Difference in supervision (1 mark)
  • Difference in interest and cost (1 mark)
  • Difference in debt-trap risk or examples of sources (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 paper2026 board paper, set 32/1/1: 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.