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Q.

Banks and cooperative societies should increase their lending in ____ areas.


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Detailed Solution

Banks and cooperative societies should increase their lending in rural areas.
People from rural areas usually borrow money from moneylenders and traders who charge a very high-interest rate, leading them into a debt trap. These moneylenders also ask for their land as collateral in case the farmer cannot repay, which makes them lose their only asset, land. Meanwhile, the formal sector provides loans at a cheap and affordable interest rate without undue exploitation. Thus, formal sources serve as a building block for rural households.
 
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