Question

Why are poor households still dependant on informal sources of credit? Give reasons.

Answer 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 

Answer 2

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.