Why do we need expand formal source of credit in india explain?
Answers
#BAL
. The cost of informal loans is much higher and often leads to a debt trap. Also, people who might wish to start a new enterprise by borrowing may not do so because of the high cost of borrowing in such a case.
. Most loans from informal lenders carry a very high interest rate and do little to increase the income of the borrowers. Thus, it is necessary that banks and cooperatives increase their lending particularly in the rural areas, so that the dependence of the poor on informal sources of credit reduces.
. It is important that the formal credit is distributed more equally so that the poor can benefit from the cheaper loans.
(1)to save from debt trap.
(2)Its provide cheap and affortable dieaseas.
(3)to save people from exploitation of informal sector.
(4)the RBI supervise the functioning of formal source of loan.
(4)formal sources charge less rate of intreast.
Hope it helps you
Explanation:
