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Social Science · 2026 · 5 marks
CBSE 2026 · Region 3 · Set 2 · Q38
(a) Explain the difference between formal and informal sources of credit.
(a)
Explain the difference between formal and informal sources of credit.
OR
(b)
Explain the role of banks in credit-related activities in India.
Marking-scheme solution
| Formal source of credit | Informal source of credit |
| (i) Loans from the banks and cooperatives. | (i) Loans from zamindars and relatives. |
| (ii) Low rate of interest. | (ii) High rate of interest. |
| (iii) Supervised by Reserve Bank of India (RBI). | (iii) No organisation supervises the credit activities. |
| (iv) Fixed rate of interest. | (iv) No fixation of interest rate. |
| (v) Extensive documentation. | (v) Documents may or may not be demanded. |
| (vi) Collateral is necessary. | (vi) Collateral may or may not be necessary. |
| (vii) Borrowers cannot be exploited. | (vii) High chances of exploitation. |
(b) Explain the role of banks in credit-related activities in India.
(i) Banks use the major portion of the deposits to extend loans.
(ii) There is huge demand for loans for various economic activities.
(iii) Bank received interest from the borrowers.
(iv) Interest received from borrowers is the asset of the bank.
(v) Banks give credit for various activities such as home loan, medical loan, personal loan etc.
(vi) Reserve Bank of India (RBI) monitors credit activities of banks.
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CBSE Class 10 Social Science past-paper question from the 2026 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.