“The rich households are availing cheap credit from formal lenders whereas the poor house holds have to pay a heavy price for borrowing.”

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Asked: 2023-11-08T18:30:27+05:30 In: Social Science
“The rich households are availing cheap credit from formal lenders whereas the poor house holds have to pay a heavy price for borrowing.”

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“The rich households are availing cheap credit from formal lenders whereas the poor house holds have to pay a heavy price for borrowing.”

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      • The formal sector still meets only about half of the total credit needs of the rural people.
      • The remaining credit needs are met from informal sources.
      • Most loans from informal lenders carry a very high interest rate and do little to increase the income of the borrowers.
      • Thus, it is necessary that banks and cooperatives increase their lending particularly in the rural areas, so that the dependence on informal sources of credit reduces.
      • While formal sector loans need to expand, it is also necessary that everyone receives these loans.
      • At present, it is the rich households who receive formal credit whereas the poor have to depend on the informal sources.
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