Question

why do we need to expand formal sources of credit in India
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Answer 1

Answer:

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

Answer:

There is need to expand formal sources of credit in India as: (i)This would lead to higher incomes and many people could then borrow cheaply for a variety of needs. (ii)They could grow crops, do business, set up small-scale industries etc. (iii)They could set up new industries or trade in goods.