Why do we need to expand formal sources of credit in india?

Question: Why do we need to expand formal sources of credit in india?

Expanding formal sources of credit in India is crucial for several reasons:

Lower Interest Rates: Formal sources offer loans at lower interest rates compared to informal lenders, making borrowing more affordable.

Financial Inclusion: Expanding formal credit helps include more people, especially those in rural areas, in the financial system.

Economic Growth: Access to formal credit can boost small businesses and entrepreneurship, driving economic growth.

Regulation and Security: Formal sources are regulated, providing a safer and more reliable option for borrowers.

Reduced Exploitation: Informal lenders often exploit borrowers with high interest rates and harsh terms. Formal credit reduces this exploitation.

By expanding formal credit, India can foster a more inclusive and robust economy.

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