Describe two different credit situations where credi tplays a positive role and a negative role .
Answers
Credit assumes a significant part in a nation's advancement. By authorizing credits to creating businesses and exchange, banks furnish them with the essential guide for development. This prompts increment in the generation, benefits and business. Notwithstanding, alert must be practiced on account of advances from the casual segment which incorporate high financing costs that might be more hurtful than great. Therefore, it is vital that the formal area gives out more credits with the goal that borrowers are not tricked by moneylenders, and can at last add to national improvement. For instance an advance given to a crisp post-graduate for setting up a business may add to work age, framework improvement sooner rather than later.Credit plays a crucial role in a country’s development. By sanctioning loans to developing industries and trade, banks provide them with the necessary aid for improvement.This leads to increase in the production, profits and employment. However, caution must be exercised in the case of loans from the informal sector which include high interest rates that may be more harmful than good.For this reason, it is important that the formal sector gives out more loans so that borrowers are not duped by moneylenders, and can ultimately contribute to national development.For example- a loan given to a fresh post-graduate for setting up a business might contribute to employment generation, infrastructure development in the near future.
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