People obtain loan from various sources. The various types of loans can be grouped as formal sector loans and informal sector loans. Formal sector: It Includes banks and cooperatives. The Reserve Bank of India supervises the functioning of formal sources of loan. The RBI monitors the banks in actually maintaining cash balance. Similarly, the RBI sees that these banksgive loans not ju st to profit-making businesses and traders but also to small cultivators, small-scale industries, to small borrowers etc. Periodically banks have to submit information to the RBI on how much they are lending and to whom, at what interest rate, etc. Informal sector: It includes moneylenders, traders, employers, relatives and friends etc. There is no one to supervise their credit activities. It can charge whatever interest rate they choose. There is no one to stop them from using unfair means to get their money back.