cheap and affordable credit is crucial for the country's development. Justify.
Answers
Answer:-Cheap and affordable credit is crucial for the country's development due to the following factors:
More lending would lead to higher incomes and encourage people to invest in agriculture, engage in business and set up small scale industries.
Cheap credit means more income would be left with the borrower to reinvest rather than return as interest. This leads to acceleration of economic activity.
Cheap credit would also allow weaker sections of society to enter formal sector of lending and rid them of exploitation at the hands of informal moneylenders.
Affordable credit would also end the cycle of debt trap and lead to sustainable economic activity that would allow borrowers to invest in better technology to make their business more competitive.
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Most loans from formal lenders Carry a Very high interest rate and do not help to increase the income of the borrowers.
Does it is necessary that the bank and the cooperative increase the lending in the ruler areas, so that the dependence On informal sources of credit reduces. While formal sector loans need to expand it also necessary that everyone receives these loans besides this it is important that the formal credit is distributed more equally so that the poor can benefit from the cheaper loans.
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