Question

Most of the poor household are still depend on informal source of credit. explain

Answer 1

1. Banks are not present everywhere in rular area .
2. Even when they are present getting a loan from a bank is much more difficult than taking loan from informal sector.
3. Informal lenders like money lenders know the borrowers personally and hence are often willing to give a loan without collateral.
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Answer 2

Answer:

Poor households still depend on informal sources of credit because: Bank loans require proper documentation and collateral which is rarely available with poor households. Informal sources of credit such as moneylenders know the borrowers personally and are often willing to give a loan without a collateral.

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