Why are most of the poor households deprived from the formal sectors of loans.
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(i) Banks are less in rural areas, whereas the informal sources are present in all villages.
(ii) Getting a loan from banks is much more difficult than taking a loan from informal sources, because banks require proper documents and collateral, which most of the poor people do not possess. This is true for both urban and rural areas.
(iii) Formal sources provide loans only for productive purposes, whereas informal sources provide credit for other purposes also.
(i) Banks are less in rural areas, whereas the informal sources are present in all villages.
(ii) Getting a loan from banks is much more difficult than taking a loan from informal sources, because banks require proper documents and collateral, which most of the poor people do not possess. This is true for both urban and rural areas.
(iii) Formal sources provide loans only for productive purposes, whereas informal sources provide credit for other purposes also.
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