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“Poor households still depend on informal sources of credit.”

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Poor Households still depend on informal sources of credit because:-

. Banks are not present everywhere on rural area.
. Even when they are present getting a loan from the bank is much more difficult than tabbing a loan from informal sources.
. Mega banks or public sector banks require proper documents and collateral.
. Absence of collateral is of one of the major reasons which prevent the poor from getting bank loans.
. Informal lenders such as money lenders they know the borrowers personally and they are willing to give a loan without collateral.

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