Social Sciences, asked by afreditiDmaulad, 1 year ago

Why are poor household still dependant on informal sources of credit? Explain any 3 reasons .

Answers

Answered by dainvincible1
1
 poor household still dependant on informal sources of credit because
1 there is a lack of job .they don't have a proprer job to feed theie family 
2 they r too poor and that's y their economic condition is misirable
3  they have inadequate banking system and a lack of documents so that they can get loans 
Answered by PR0FESS0R
0

Answer:

Poor households are still dependent on informal sources of credit due to the following reasons -

  • Banks are not present everywhere in rural India. Even when they are present, getting  loan from bank is much more difficult than taking a loan from informal sources.
  • Bank loans require proper documents and collateral which poor people in India cannot produce to the bank.
  • Informal lenders such as moneylenders know the borrowers personally and hence are often wiling to give a loan without collateral.
  • The borrowers can approach the moneylenders even without repaying their previous loans.
  • Banks do not sanction any loan to the borrowers if they have not cleared the previous loans.

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