Why are credit arrangements not fair for all sections of society?give three reasons, suggest two remedies for the problem
Answers
Answer:
1-) In both rural and urban areas, rich households have access to cheap credit from formal sources like banks
2- Formal lenders are not present in all rural areas, and the high interest rate charged by local moneylenders' results in debt trap due to which they are not able to come out of it.
hope this is help full
Answer:
Ans. (1) Undoubtedly, credit arrangements are not very fair for all sections of society The share of formal sector credit is higher for. the richer households as compared to the poorer households. This has the following reasons :
(i) Poverty affects poor households’ capacity to borrow. Formal sector credit requires proper documents and collateral as security against loans. So, poor people lack in providing such things which affect their capacity to borrow
.
(ii) The poor people do not repay loan on time.
(iii) The people in villages may not have access to banks in their village.
(2) (i) More credit facilities should be made available in rural areas by opening more banks there.
(ii) The procedure of giving loans should be made easier and simpler.
Explanation: