Question

explain the social and economic values for which it is necessary to expand formal sources of credit in india

Answer 1

The reasons for expanding credit in India are

(i) High cost of borrowing leads to a major share of earnings going into payment of interest on the loan.

(ii) Sometimes the higher interest rate leads to the requirement to pay more than the earnings, thus falling into a debt-trap.

(iii) Borrowers falling into debt-traps discourage more people from borrowing, thus reducing development of the country.

(iv)Banks and cooperative societies lending to more borrowers will lead to higher incomes and many people could then borrow cheaply for a variety of needs like growing crops, set-up business or small-scale industries.

Answer 2

Answer:

• many poor section of the people are not able to live a better livelihood because of informal sources so, it should be expanded

• increase in formal sources of credit can devlop a country to enhance the scenerio of poor

Explanation: