Study the table given below and answer the questions that follow :

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asked Aug 22, 2018 in Class X Social Science by aditya23 (-1,636 points)

Study the table given below and answer the questions that follow :

            PEOPLE DEPENDING ON FORMAL SECTOR CREDIT IN URBAN AREAS

(i) Poor households share of formal credit in the urban areas is low as compared to that of rich households. Why is it so ?
(ii) Mention two difficulties faced by poor households in taking loan from a formal sector.

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answered Aug 22, 2018 by priya12 (-12,152 points)
(i) Poor households share of formal credit in urban areas is low as compared to that of rich households due to the following reasons :
(a) Poors generally lack in collateral guaranters and do not have proper mode of repayment.
(b) Informal sources of credit are generally flexible in timings, rate of interest, repayment schedule etc.
Therefore, it is easier for poors to approach moneylenders as they know them
personally.

(ii) (a) Poors are not able to satisfy general terms of credit mostly collateral guarantees.
(b) Informal moneylenders know the boor borrowers personally and therefore flexible in terms of repayment schedule, amount and interest etc.

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