The credit activities of the informal sector should be discouraged. Support tje statement with arguments
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The credit activities of the informal sector should be discouraged because:
. 85% of loans taken by the poor households in the urban areas are from informal sources.
. Informal lenders charge very high interest on their loans.
. They try to charge more and more interest on their loans.
. There are no boundaries and restrictions.
. Higher cost of borrowing means a larger part of the earnings of the borrowers is used to repay the loan.
. In certain cases, the high interest rate for borrowing can mean that the amount to be repaid is greater than the income of the borrower.
. This could lead to increasing debt and debt trap, therefore the credit activities of the informal sector should be discouraged
. 85% of loans taken by the poor households in the urban areas are from informal sources.
. Informal lenders charge very high interest on their loans.
. They try to charge more and more interest on their loans.
. There are no boundaries and restrictions.
. Higher cost of borrowing means a larger part of the earnings of the borrowers is used to repay the loan.
. In certain cases, the high interest rate for borrowing can mean that the amount to be repaid is greater than the income of the borrower.
. This could lead to increasing debt and debt trap, therefore the credit activities of the informal sector should be discouraged
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