Question

Which one of the following statements is correct regarding the loans taken by urban households in 2003?
(A) 85% poor households took the loans from informal sector.
(B) 90% rich households took the loans from informal sector.
(C) 28% well off households took the loans from formal sector.
(D) 53% households with few assets took the loans from the formal sector.

Answer 1

Answer:

d option is the right answer

Answer 2

(A) 85% poor households took the loans from informal sector.

Explanation:

In 2003, loans taken by urban households were analyzed and the following was inferred:

• 85% loans taken by poor households in the urban areas are from informal sources.
• Rich on the other hand, took 10% loans from informal sources, and 90% from formal sources.
• Similarly in the rural areas, the rich households are avail cheap credit from formal lenders whereas the poor households have to pay a large amount for borrowing.

The formal sector meets only 50% of the credit requirements. Since the informing lenders levy high interest rates, it is important to increase formal lending facilities through banks and cooperatives in the rural areas of the country.