Why are most of the poor households deprived from the formal sector loans ?
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They are deprived from the formal sector of loans because of (a) Lack of Collateral.(b) They are illiterate.(c) They can not fulfill the formalities of the formal sector of loans.
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Most of the poor households deprived of the formal sector loans because they are not able to provide all the documents and collateral in order to obtain loans from banks which works under the formal sector. Due to lack of awareness and illiteracy poor household end up taking home fro money lenders at very high rates because the formalities are comparably less than the financial institution. Moreover, many options even don't have their bank accounts present days.
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