What are the 2 main reasons for formal credit not being availabe to poor?Why is there a need to expand rural credit? (4 marks)

eco text page 50..

1. banks are not present everywhere in rural india,getting loan from a bank is much more difficult than taking a loan from informal sources.

2. bank loans require documents and collateral. Absence of collateral ,prevents the poor from geting nank loans.

for the second part of the question..

Cheap and affordable credit is crucial for country's evelopment.

to reduce the dependence on informal sources.so that poor can benefit from the cheaper loans