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Ayushree
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Asked: 2025-11-15T04:16:44+00:00 In:

‘Expanding access to loans in the formal sector is important, yet it is equally critical that these loans are accessible to all people for national development.’ Justify the statement.

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High interest rates can make loan repayment exceed a borrower’s income, creating rising debt and a debt trap. Many avoid starting enterprises due to costly loans. Hence, banks and cooperatives must lend more so people can access cheaper credit and improve incomes.

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      1. In some situations, very high borrowing interest rates can make the repayment amount larger than the borrower’s actual income.
      2. People who want to begin a small enterprise by taking a loan may avoid doing so because of the high borrowing cost.
      3. Therefore, it is important for banks and cooperative societies to provide more loans. This can increase incomes and many people will then be able to borrow at lower rates for different needs.
      4. They could grow crops, do business, set up small-scale industries etc. They could set up new industries or trade in goods.
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