Charts:
- The above graph shows all the sources of credit(loans) per Rs. 1000 of rural households in India in 2012.
- As you can see in a rural household moneylenders , landlords and relatives and friends account for 44% of total credit in 2012.
- The formal sector including commercial banks , cooperative society/banks and government account for 56% of total credit in 2012.
- The above graph shows formal and informal sources of credit in urban areas .
- As you can see 85% of the total credit in poor households comes from informal sources .
- Compared with rich households , only 10% is coming from informal rest 90% is from formal sources .
- The rich households are able to avail of cheap credit whereas the poor household still has to pay high-interest rates .
- This shows that most loans in poor households are coming from informal lenders with high-interest rates and do little to increase the income of the borrower.
- While formal sector loans need to expand , it is also necessary that everyone receives these loans. At present, only rich households can receive cheap loans .
