Question

Why is there a need for credit in rural areas?

Answer 1

Due to following reasons there is need to expand rural credit
(i) The expansion of formal sources of rural credit is essential to save poor from the high rate of interest of moneylenders and debt-trap.
(ii) Cheap and easily available credit can encourage self employment like small scale industries or business. It can lead to higher income and contribute to the country’s development.
(b) Rural poors can get cheap loans from sources like cooperatives banks, Self Help Groups, regional rural banks, etc..

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Answer 2

There is a need for credit in rural areas because the people do not have sufficient capital to invest in agricultural sector.Such a credit will fulfil their requirements and help them to invest in non-agricultural sector as well.