"cheap and affordable credit is crucial for country's development".explain the statement in 5 points.
Answers
When money is borrowed at high rate of interest, a larger part of income is spent on repaying the debt and a small part of earning is left for the fulfillment of one’s needs. This may result into low standard of living.
In case of high interest rates, the amount of money to be repaid keeps on accumulating faster than the income of the borrower. This can lead to an increase in debts.
Many a times, people who want to start a small business of their own may not do so due to high rate of interests charged on loans.
More lending would lead to higher incomes and encourage people to invest in agriculture, engage in business and set up small scale industries. This leads to acceleration of economic activity. It also allow weaker sections of society to enter formal sector of lending and rid them of exploitation at the hands of informal moneylenders.