Why are informal sources of credit proffered in rural areas? Give five reasons.
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it is because they lack in documentation which is a necessary term of credit.
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Answer:
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Explanation:
1. The rural area people are unable to provide collateral.
2. There is no need of paper work which the rural poor people are not able to provide.
3. In rural areas moneylenders, traders and rich landlords have no objection to defaulters even if the previous loan is unpaid.
4. Poor people hesitant and are not confident about the functioning of the banks.
5. Banks are not accessible to the villages of poor people.
6.The procedure by which moneylenders and rich landlords is very simple.
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