Does credit activities of the informal …

CBSE, JEE, NEET, CUET

Question Bank, Mock Tests, Exam Papers

NCERT Solutions, Sample Papers, Notes, Videos

Install Now

Does credit activities of the informal sector should be discouraged support the statement with arguments?

Posted by Sameer Joshi 6 years, 8 months ago

CBSE > Class 10 > Social Science

3 answers

Gaurav Seth 6 years, 8 months ago

The credit activities of the informal sector should be discouraged because:

85% of loans taken by the poor households in the urban areas are from informal sources.
Informal lenders charge very high interest on their loans.
They try to charge more and more interest on their loans.
There are no boundaries and restrictions.
Higher cost of borrowing means a larger part of the earnings of the borrowers is used to repay the loan.
In certain cases, the high interest rate for borrowing can mean that the amount to be repaid is greater than the income of the borrower.
This could lead to increasing debt and debt trap, therefore the credit activities of the informal sector should be discouraged.

1Thank You

Himanshi Sharma 6 years, 8 months ago

The credit activities of the informal sector should be discouraged becoz :- (1).85%of loans taken by the poor household in the urban areas r from informal sources.(2).Informal landers charge very high interest on their loans.(3).There r no boundaries and restrictions.(4).Higher cost borrowing means a large part of the earning of the borrowers is used to repay the loans.

2Thank You

@ Aashu 6 years, 8 months ago

Yes , often times the informal sector exploiates the poor peasants and often creates the debt trap for them....

1Thank You

ANSWER