Q5ASSIGNMENT-II
Q5. Bring out the significance and implications of now-institutional credit.
Dear Student
Non-institutional sources of credit contribute a significant share in the total credit available to the indian farmers. The ease of availability and personal interactions with the private moneylenders are the key reasons that farmers usually prefers non-institutional sources of credit.
However, such sources, being unmonitored by government and law to a great extent, allow private moneylenders to charge higher interest rate leading the farmers into a debt cycle. if the farmer has a bad crop, he is forced to either surrender his collateral or sell off a part of his land , in order to repay his loan.
Regards
Non-institutional sources of credit contribute a significant share in the total credit available to the indian farmers. The ease of availability and personal interactions with the private moneylenders are the key reasons that farmers usually prefers non-institutional sources of credit.
However, such sources, being unmonitored by government and law to a great extent, allow private moneylenders to charge higher interest rate leading the farmers into a debt cycle. if the farmer has a bad crop, he is forced to either surrender his collateral or sell off a part of his land , in order to repay his loan.
Regards