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4. What are the variou sources of credit in ewal
areas & which one of them is more convenient
source of ceedit? Why? Give two reasons.
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Answer:
↪Various sources of credit in rural areas are :
(i) Agricultural traders,
(ii) Moneylenders,
(iii) Commercial banks,
(iv) Cooperative societies and
(v) Relatives and friends
↪The most convenient source of credit is a moneylender.
It is most convenient because of the following two reasons :
(i) There is no need of documentation process while taking loan from informal sources (moneylenders).
(ii) No collateral is required. Collateral is an asset that the borrower owns (such as land,building, livestock etc.) and uses this as a guarantee to the lender until the loan is repaid.
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