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| 1. |
why informed sources of credit preferred in rural areas? give 5 reasons |
| Answer» \tBanks are not present everywhere in rural India.\tEven if they are present, getting a loan from a bank is much more difficult than taking a loan\tfrom informal sources.\tBank loans require proper documents and a collateral. Absence of collateral is one of the major reasons which prevents the poor from getting bank loans.\tInformal lenders like moneylenders know the borrower personally and hence, are often willing to give a loan without a collateral.\tThe borrowers can, if necessary, approach the moneylender even without repaying their earlier loans.\tHowever, the moneylenders charge very high rates of interest, keep no records of the transactions and harass the poor borrowers. | |