Two files are used to store the password information. One file contains only one character and other contains encripted format. Which file have encrypted password?

The /etc/shadow file contains encrypted passwords. In modern Unix systems, password information is split: /etc/passwd contains public user information (username, UID, GID, home directory, shell) and is world-readable, while /etc/shadow contains sensitive data including encrypted passwords and is readable only by root. The 'one character' mentioned in the question likely refers to the 'x' placeholder in /etc/passwd which indicates the password is stored in /etc/shadow. The .rch extensions are not standard Unix files.