Question

Why do we need to expand formal sources of credit in India give three reasons according to 5 marks question is this give me the answer correctly and quickly

Answer 1

hope it helped u. it is from ALL IN ONE reference book

Answer 2

We need to expand formal sources of credit due to following reasons:
1. High rate of interest- The informal sources of credit charge very high rate of interest and take advantage of helplessness of poor people.
2. Conditions with the loan: Many times the informal sources of credit attach exploitative conditions with the loan. Ex- farmers are forced to sell their crop at a very low price to moneylenders and traders.
3. High rate of interest: also means less income for the borrower and eventually leading to debt trap.
Such exploitation and harassment does not take place in case of formal sources of credit.