Question

The credit activities of the informal sector should be discouraged explain

Answer 1

see the attachment for answer

Answer 2

Answer:

Credit refers to the asset that are borrowed from the lenders at an interest.

The credit of informal sector is borrowed from the money lenders, rich landlords, relatives and friends.

The credit activities of the informal sector should be discouraged because of the following reason :

• The money lenders charge a hight amount of interest that is hard to repay and it leads to debt trap
• The high rate of interest take away large amount of saving of the borrower.
• It doesn't requires any terms of credit that acts a proof of their loan.
• People wanting to start any enterprise can't fulfil their wish in the fear of large repayment of credit.