plays a crucial role in a country's development.
By sanctioning loans to developing industries and trade, banks provide
them with the necessary aid for improvement. This leads to increase in the production,
profits and employment. However, caution must be exercised in the case of loans
from the informal sector which include high interest rates that may be more
harmful than good. For this reason, it is important that the formal sector
gives out more loans so that borrowers are not duped by moneylenders, and can
ultimately contribute to national development. For example- a loan given to a fresh
post-graduate for setting up a business might contribute to employment
generation, infrastructure development in the near future.
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