Question

wime renom
Mention the reasons for which
the informal sources of credit is
preferred in rural area? (5)
dah​

Answer 1

Informal sources of credit are preferred in rural areas because people living there are poor and they have nothing to keep as collateral in banks so they take loans from money lenders who gives them loans without any collateral. In formal sources there is high rate of interest. Due to which people cant pay back...

Answer 2

Answer:

HERE IS YOUR ANSWER DEAR....

Explanation:

1. The rural area people are unable to provide collateral.

2. There is no need of paper work which the rural poor people are not able to provide.

3. In rural areas moneylenders, traders and rich landlords have no objection to defaulters even if the previous loan is unpaid.

4. Poor people hesitant and are not confident about the functioning of the banks.

5. Banks are not accessible to the villages of poor people.

6.The procedure by which moneylenders and rich landlords is very simple.