Best answer: Why do you think that there is a need to expand formal sources of credit in India?

Why do we need to expand formal sources of credit class 10th?

There is need to expand formal sources of credit in India as: (i)This would lead to higher incomes and many people could then borrow cheaply for a variety of needs. (ii)They could grow crops, do business, set up small-scale industries etc. (iii)They could set up new industries or trade in goods.

Why do we need to expand formal sources of credit Brainly?

Answer: We need formal sources of credit in order to reduce the dependence of farmers on informal sources of credit like money lenders. To reduce the higher risk associated with informal sources of credit because of fluctuating terms and conditions. To avail cheaper credit to farmers in rural areas.

Why formal sources of credit is important for a country?

Answer: Formal sources of credit gives money at less interest rates as compared to informal sector so the profit which the borrower earns is more. Answer: Formal sources of credit gives money at less interest rates as compared to informal sector so the profit which the borrower earns is more.

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Why there is a need to expand credit in rural areas?

(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.

Why formal sources of credit is better?

Formal sources of credit preferred over Informal sources of credit because: i. Formal sources have low cost of borrowing ii. Higher Income through cheap borrowing iii.No exploitation and debt trap.

Is there a great need to expand formal sources of credit in rural India?

There is a great need to expand the formal sources of credit in rural India because: There is no organisation to supervise credit activities of the informal sector. It could lead to increasing debt among the borrowers. The rate of interest is very high in informal sector.

Why do we need to expand formal?

To make sure that the poor can benefit from the cheaper loans, it is important that the formal credit is distributed more equally. Usually the poor have to depend on informal sources of credit and it is the richer households who receive formal credit.

How do we expand formal sources of credit in rural areas?

. Most loans from informal lenders carry a very high interest rate and do little to increase the income of the borrowers. Thus, it is necessary that banks and cooperatives increase their lending particularly in the rural areas, so that the dependence of the poor on informal sources of credit reduces.

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Which are the two major sources of formal sector credit in India why do we need to expand formal sources of credit?

(i) Banks and (ii) Cooperatives. Need to expand formal sources of credit are : (i) To save the poor farmers and workers from the exploitation by the informal sector credit. (ii) Informal sector charges a higher interest on loans which means that a large part of the earnings is used to repay the loan.

Why is formal credit important for economic development of our nation?

Ans: Credit is a crucial element in economic development of a country because: It helps to meet the ongoing expenses of production. It helps in increasing earnings. It helps in completing production in time.

What are the relative importance of formal and informal credit?

The rich at present have more access to cheaper credit from the formal sector, while the poor still have to depend on loans at higher rates of interest from the informal sector. Cheaper credit is essential for development in a country.