Question

How can the formal sector loan be made beneficial for poor farmer

Answer 1

Hi

In the formal loan providers banks and cooperates are included.
poor people and farmers seek loans from the informal sectors, which exploit them and charge high interest rate.
Thus by taking loans form formal institutes the benefits are:
1. The formal sector lend more to poor people and worker.
2.It provide cheap and affordable credit.
3. It ensure that every one receives loans.
4. It provide guidance and help
5. There are more formal institutes

Answer 2

1. Their is a need to increase the lending activities of the formal sector in rural areas, to reduce the dependence on the informal sector of credits.

2. Informal sources like Moneylender, charges a high interest rate whereas bank charges less interest rate on loans taken, so it increase the income of borrowers.

3. Their is also a necessary need to distribute the loans from formal sector equally to the poor people.

4. Their is a need to set up banks to several places in rural areas, so that poor farmers can borrow at cheap rate.

5. Their is a need that large share of these loans also given to poor farmers and workers to set up their own business and small scale industries.