Question

Formal credit meet only about half of the total credit need of rural people where does the other half come from

Answer 1

Compare o the formal lenders most of the informal lenders charge much higher interest rates on loans Besides, the informal lenders impose various other tough conditions. For example they make the farmers promise to sell the crop to him at a low price. There is no such condition in formal sector Loans taken by poor people from informal lenders sometimes lead them into a debt trap because of high interest rate The formal sources of credit in India still meets only about half of the total credit needs of the rural people

Answer 2

Compared to the formal lenders most of the informal lenders charge much higher interest rates on loans Besides, the informal lenders impose various other tough conditions. For example they make the farmers promise to sell the crop to him at a low price. There is no such condition in formal sector Loans taken by poor people from informal lenders sometimes lead them into a debt trap because of high interest rate The formal sources of credit in India still meets only about half of the total credit needs of the rural people