Question

What are the various sources of credit in rural areas? Which one of them is the most convenient sources of credit? Why is it most convenient? Give 2 reasons.​

Answer 1

Answer:

There are both formal sources of credits like self help groups and cooperative banks and informal sources of credits like money lenders,traders etc.

Informal sources are mostly preferred in rural areas.

Reasons:

1)The borrower personally knows the money lenders,which increases the chance of borrowing money.

2) Moreover,banks require collateral

3)Sometimes banks mayn't give the amount of loan asked for

4)In some places,banks don't even exist.

Answer 2

There are various sources of credit in rural areas are: relatives, friends, money lenders, traders etc... Most dominantsource of credit is money lenders. it is because small farmers poor, illiterate and can not fulfill the conditions of co-laterals.

Hope my answer is correct and help u out....