Choose if the given statement is True/False.

People in rural areas do not prefer formal sources of credit in India.

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True

False

answer is A.

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Detailed Solution

The given statement is True.
The people in rural areas do not prefer formal sources of credit because due to a lack of education and knowledge, people living in rural areas are more used to informal sources of credit, which often results in exploitation by moneylenders and debt traps. There are not many banks in the rural areas as well and sometimes no bank reaches the interior of the rural areas. Therefore, Banks and Cooperatives need to promote lending activities in rural areas. It is imperative for them to reduce dependency on informal sources of credit. It is also seen that rural areas are more in need of loan facilities as compared to urban areas. Additionally, loans from banks and cooperatives are much cheaper and safer than informal credit. As such, increasing the lending activities will help to improve the livelihood of people living in rural areas and help in their overall development.

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