why do we need to extend the formal source of credit
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HELLO
YOUR ANSWER IS
The reasons for expanding credit in India are
(i) High cost of borrowing leads to a major share of earnings going into payment of interest on the loan.
(ii) Sometimes the higher interest rate leads to the requirement to pay more than the earnings, thus falling into a debt-trap.
(iii) Borrowers falling into debt-traps discourage more people from borrowing, thus reducing development of the country.
(iv)Banks and cooperative societies lending to more borrowers will lead to higher incomes and many people could then borrow cheaply for a variety of needs like growing crops, set-up business or small-scale industries
YOUR ANSWER IS
The reasons for expanding credit in India are
(i) High cost of borrowing leads to a major share of earnings going into payment of interest on the loan.
(ii) Sometimes the higher interest rate leads to the requirement to pay more than the earnings, thus falling into a debt-trap.
(iii) Borrowers falling into debt-traps discourage more people from borrowing, thus reducing development of the country.
(iv)Banks and cooperative societies lending to more borrowers will lead to higher incomes and many people could then borrow cheaply for a variety of needs like growing crops, set-up business or small-scale industries
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The formal credit should be extent at more than informal bcoz...
1) The formal credits have low interest than the informal sources....
2) The formal credits are always safe to be taken as it has a fixed time period of return back but informal sources can be extended till lifrpe time...
3) Here there is clear proof of with documentation where as in informal there is no documentation so this more chances of biased activities. ...
1) The formal credits have low interest than the informal sources....
2) The formal credits are always safe to be taken as it has a fixed time period of return back but informal sources can be extended till lifrpe time...
3) Here there is clear proof of with documentation where as in informal there is no documentation so this more chances of biased activities. ...
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