Categories: Indian Economy

The Informal (unorganized) financial enterprises

The organised sector mainly includes banks, Non-Banking Financial Companies (NBFCs), and Nidhi companies, where the first two are governed by the Reserve Bank of India (RBI) and the Ministry of Corporate Affairs is responsible for the regulation of Nidhi Companies.

The informal financial sector comprises partnership firms, sole proprietary concerns, individuals, and institutions like Local money lenders, Brokers, Traders, Landlords, Indigenous bankers, etc., who lend money to needy persons and institutions. They are not under the supervision and control of RBI or any other regulatory body. Non-Governmental Organisations (NGOs) and Self-Help Groups (SHGs) are other categories of institutions working in the informal financial sector to implement special programmes and formulate development policies. Most of these NGOs/ SHGs are credit-linked by banks.

Summary:

The informal economy consists of activities that have market value but are not formally registered and they are not regulated by any regulated bodies. The informal economy is difficult to measure. This is because activities within it cannot be directly observed, and for the most part, participants in the informal economy do not want to be accounted for.

Surendra Naik

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Surendra Naik

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