Answer:
Development
is sustained by a proper credit policy. By giving loans to agriculture,
industry and trade, banks provide them with the necessary funds for carrying on
their business without problems relating to finance.
This results in increased production and services, more employment and
profits.
Caution has to be exercised by the lenders when high risks
are expected, so that there are no losses.
As loans from the informal sector have very high interest rates, they do
more harm than good. Thus, it is important that the formal sector gives more
loans, so that borrowers are not exploited by moneylenders from the informal
sector. The results will contribute to overall national development.
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