"poor households still largely dependent on informal sources of credits to meet their neeeds'" why does this happen?
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nowadays things are becoming very costly , so poorers need to take money by credits,loans etc..
deadpoolstark3ox52oe:
Wrong bro
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Poor households are still dependent on informal sources of credit due to the following reasons -
- Banks are not present everywhere in rural India. Even when they are present, getting loan from bank is much more difficult than taking a loan from informal sources.
- Bank loans require proper documents and collateral which poor people in India cannot produce to the bank.
- Informal lenders such as moneylenders know the borrowers personally and hence are often wiling to give a loan without collateral.
- The borrowers can approach the moneylenders even without repaying their previous loans.
- Banks do not sanction any loan to the borrowers if they have not cleared the previous loans.
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