Why do you think that the share of formal sector credit is higher for the richer households compared to the poorer households?


The share of formal sector credit is higher for the richer households compared to the poorer households. There is a reason behind this statement that the richer households are in much better situation to give collateral and other necessary documents which the banks ask for while providing loan. Richer households also have a good capacity to pay the debts on time. They have means to exert pressure on the banks and the cooperatives to sanction loans.


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