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Question
Why do most of the rural households still remain dependent on the informal sources of credit? Explain.
Solution
- Limited availability of Banks in rural areas.
- People in rural areas face problems with regard to documentation.
- Absence of collateral is one of the major reasons which prevents the poor from getting bank loans.
- Rural people get easy loans from richer households through informal ways.
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RELATED QUESTIONS
Which one of the following is NOT an informal sector loans for poor rural household in India?
Farmers usually take crop loans at the beginning of the season and repay the loan after ______.
Sometimes lenders demand against loan ______.
Most of the informal lenders charge ______.
The rich households are availing cheap credit from formal lenders whereas the poor households ______.
In rural areas, the main demand for credit is for ______.
How do Self Help Groups help borrowers to overcome the problem of lack of collateral? Explain.
Explain any three terms of Credit.
Assertion (A): Banks are not ready to lend money to certain borrowers.
Reason (R): Some people do not have collateral.
Read the given source and answer the questions that follow:
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Loans from Cooperatives Besides banks, the other major source of cheap credit in rural areas are the cooperative societies (or cooperatives). Members of a cooperative pool their resources for cooperation in certain areas. There are several types of cooperatives possible such as farmers cooperatives, weavers cooperatives and industrial workers cooperatives, etc. Krishak Cooperative functions in a village not very far away from Sonpur. It has 2300 farmers as members. It accepts deposits from its members. With these deposits as collateral, the Cooperative has obtained a large loan from the bank. These funds are used to provide loans to members. Once these loans are repaid, another round of lending can take place. Krishak Cooperative provides loans for the purchase of agricultural implements, loans for cultivation and agricultural trade, fishery loans, loans for construction of houses and for a variety of other expenses. |
- 'Cooperative society' is an example of which source of 'credit'? (1)
- Explain the contribution of Cooperative Societies in rural development. (1)
- Mention any two sources of capital for Self-Help Groups. (2)
