Question

most of the poor household are still dependent on the informal sources of credit explain

Answer 1

 (a) Banks are not present everywhere in rural India, whereas informal sources are easily available in all villages.

(b) Getting a loan from a bank is much more difficult for poor people than taking a loan from the informal resources, because bank loans requireproper documents and collateral
.(c) Moneylenders provide loan to the poor people without any collateral.

(d) Formal sources provide loan only for productive purposes, whereas the informal sources provide credit for productive and non-productive purposes

(e) Other informal sources of credit are friends and relatives, or traders and landlords, who know the borrowers personally and therefore do notdemand collateral.

Answer 2

Poor households are still dependent on informal sources of loan because:-
1. The lack a guarantee or collateral.
2. Banks are not acessible by each and every housshold especially in remote villages.
3. The previous loan should be repayed to apply for a new loan.
Thus, these factors force the poor household to take loan from informal sources. Thank you.