"Most of the poor households are still dependent on informal sources o

1.	"Most of the poor households are still dependent on informal sources of credit". Explain.
Answer» i). Banks are not present everywhere in rural India, where as the informal sources are easily available in all the villages.ii). Getting a loan from the bank is much more difficult than taking a loan from the informal resources because bank loans require proper documents and collateral. Most of the poor people don’t possess anything to offer as collateral.iii). Moneylenders provide loan to the poor people without any collateral.iv). The formal sources provide loan only for productive purposes, whereas the informal sources provide credit for productive and non-productive purposes.v). The method of business of the formal source is very complex, whereas the informal resources have a very simple way of business.

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