Question

why do we need to expand formal source of credit in county​

Answer 1

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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.

Answer 2

There is need to expand formal sources of credit in India as:

(i)Thiswould lead to higher incomes and many people could then borrow cheaply for a variety of needs.

(ii)Theycould grow crops, do business, set up small-scale industries etc.

(iii)Theycould set up new industries or trade in goods.