Significance

♤ Poor households in India, in the absence of access to formal credit, have to deal with moneylenders who charge exorbitant rates of interest. Household Survey on India’s Citizen Environment and Consumer Economy, 2016, shows that within the poorest section of the population two in three take credit from informal sources.

♤ Though access to formal financial institutions has improved over time but still thousands of villages not have a bank branch and less than 10 percent of all commercial bank credit goes to rural area.