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The formal credit is not available to the ____ due to the absence of collateral and proper documentation.

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Detailed Solution

Formal credit is not available to the rural poor due to the absence of collateral and proper documentation.
For a few reasons, formal credit is not always available to the rural poor. Banks require collateral and proper documents before they can sanction a loan, and it is difficult for the rural poor to have them. Also, banks are less common in rural areas than in urban areas. However, public sector banks are now taking the initiative to open branches in rural areas to enable financial inclusion. Another reason is the terms of credit, which are much more flexible in the case of informal lenders. But these informal lenders exploit the borrowers by putting them in debt traps.

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The formal credit is not available to the ____ due to the absence of collateral and proper documentation.