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 Why do we need to expand formal sources of credit

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https://www.meritnation.com/ask-answer/question/why-do-we-need-to-expand-formal-sources-of-credit-in-in/money-and-credit/6310579

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1)decreasing the pen and paper work..

2)educating people ..

3) awaring the people abt the disadvantages of informal sources..

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 need to expand formal sources of credit because :

1. the intrest value is less.

2. there are less chances of dept trap

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sry i thought how to expand...this is wrong ans sry..:

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the ans. is

We need to expand formal sources of credit in India for two main reasons. Firstly, to reduce dependence on informal sources of credit because the latter charge high interest rates and do not benefit the borrower much. Secondly, they will be able to provide loans to a larger group of people who trust government sanctioning more than a private loaning system.

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  • informal lenders charge a much higger interest rate on loans.so de cost to the borrower of in4mal lender is much higher
  • higher cost of borrowing means larger part of de earnings of the borrowers is used to repay the loan.so borrowers have less income left 4 themselves
  • sometimes high interest rate 4 borrowing means that de amont 2 b repaid is greater than de income of the borrower.this could lead to increasing dept
  • also people who wish 2 start an enterprise with borrowing may not do so bczz of high cost of borrowing
  • 4 these reasons banks and cooperative societies need to lent more.this would lead to higher incomes and many people could then borrow cheaply 4 a variety of needs . thy cld grw crops ,do business etc.
  • hence, for these reasons ,cheap and affordable credit is crucial 4 de countries development and hence v need 2 expand formal source of credit ....

hpe dis hlpzzzz  cheerzzzzz

and mind u  ..... de ans is sme 4 de ques...... cheap and affordable credit is crucial 4 de countries development. xplin  ..

kk :))

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