Question

Why is it necessary for banks and cooperative societies who increase their lending facilities in rural areas?

Answer 1

it is necessary for banks and cooperative societies to increase their lending facilities in rural areas to shift rural people from lending money from moneylenders or big farmers at a high interest rate and enhance their economic stability. Government has taken many initiatives in this regard like introducing SHGs(Self-Help Groups). But we have a long distance further to achieve our desired goal of enhancing the economic stability of the rural people.

Answer 2

1) Rural poor and farmers have to borrow money from money lender, at a very high rate of  interest. Therefore, the cost to the borrowing is very high.

2) A large part of the earnings of borrower is used to repay the loans. Hence, they have less  income.

3) Sometimes, a higher rate of lending means that the amount to be repaid is more than the  earning of the borrower.

4) To save the people from the clutches and exploitation by the money lenders, it is  necessary for banks and cooperatives to extend their lending activities