Question

why is it necessary for the banks and cooperative societies to increase their lending facilities in rural areas . explain

Answer 1

In this way the poor people will be able to change their livelihood, the corporate will grow and it will also create awareness among the people about the formal styles of credits. People will be able to open small businesses and expand their cultivation, new technology will be employed and it will work as a growth engine for those areas 

Answer 2

Heya

Here is your answer

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1. Higher cost of borrowing means a larger part of the earnings of the borrowers is  used to repay the loans. Hence borrowers have less income left for themselves.

2. In certain cases the higher interest rate for borrowing can mean that the amount  to be repaid is greater than the income of the borrower. This could lead to  increasing debt and debt trap. Also, people who might wish to start an enterprise  by borrowing may not do so because of the high cost of borrowing.

3. For these reasons, banks and cooperative societies need to lend more.

4. This would lead to higher incomes and many people could then borrow cheaply  for a variety of needs.

5. They could grow crops, do business, set up small-scale industries etc. They  could set up new industries or trade in goods

6. So cheap and affordable credit is crucial for the country’s development

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