Answer:
(i)
The formal sector still meets only about half of the total credit needs of the
rural people.
(ii) The remaining credit needs are met from informal sources.
(iii) Most loans from informal lenders carry a very high
interest rate and do little to increase the income of the borrowers.
(iv) Thus, it is necessary that banks and cooperatives
increase their lending particularly in the rural areas, so that the dependence
on informal sources of credit reduces.
(v) While formal sector loans need to expand, it is also
necessary that everyone receives these loans.
(vi) At present, it is the rich households who receive
formal credit whereas the poor have to depend on the informal sources.
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