Why is there a great demand of loans of credit?

Loans/credit are in great demand for a variety of economic activities. These include activities in rural areas, such as cultivation, and also in urban areas. People take loans for person reasons such as buying houses, cars, etc. but also for developing businesses. Since India is developing conomically, loans/credit play a big role in this development. However, depending on whether these loans are from the formal or informal sector, there are various risks and benefits to taking loans.For example, by taking loans from money lenders for cultivation, many farmers falling to debt-traps from which they cannot escape.