Question

Among the formal sources of credit, choose any one and explain how would you
distribute loans to people in rural areas.​

Answer 1

Answer:

The formal source of credit provide loans comparatively at the lower rate and collateral is required to obtain loan. It is supervised by RBI. It includes banks and cooperatives.

Rural finance comprises credit, savings and insurance (or insurance substitutes) in rural areas, whether provided through formal or informal mechanisms.The Government of India has set up a Long Term Rural Credit Fund (LTRCF) under the National Bank for Agriculture and Rural Development (NABARD). With the help of this fund, the Cooperative Bank and the Regional Rural Banks (RRB) can provide such higher financial support for following medium and long-term loans farmers.