Explain why the share of informal sector credit is higher for the poorr section in rural and urban areas?
This question is for 5 marks...Whomsoever answers it elaborately (must be enough for 5 mks)
WILL BE GIVEN 5 STARS AND WILL
MAKE U AS THE BRAINLIEST...FOR SURE
Answers
Answer:
Two facets of urban informal credit markets (ICMs) have been recognized by various authors one, that informal credit largely serves differing needs of low income households; and two, that under the circumstances in which current credit markets function, informal suppliers are at a disadvantage and/or have several shortcomings. This is compounded by commercial banks who do not find the urban poor viable or "bankable." Various approaches have been attempted, from promulgation of targeted credit programmes for the low income households, to active legislation that has attempted to curb the functioning of ICM suppliers. Ultimately, this has only adversely affected credit availability for the urban poor. The basic premise that this paper stands on is that the ICM plays an important and beneficial role, complementing and not contradicting the credit delivery networks of commercial banks.
Explanation: