Explain the moneylenders as a source of credit.

Money lender has a significant role in the non-institutional source of credit. They have a significant role in the rural areas because they lend their money to people with minimum time for the collateral and with high interest. Rural poor are not aware of the banking system because of the lack of education. Therefore they are forced to acquire a loan from the money lenders. Most of the people in the rural areas don’t have access to the native bankers and other financial institution; this increases the significance of the money lenders.

Even though they advance the loan, they do not accept the deposit form the people.