Why Is It Necessary for the Banks and the Cooperative Societies to Extend Their Lending Activities in the Rural Areas? Explain.

Due to the following reasons it is necessary for the banks and the cooperative societies to extend their lending activities in the rural areas:

  1. There is limited availability of the formal sector credit sources in the rural areas.
  2. The poor borrowers are bound to take loan from the moneylenders at high rate of interest
  3. Due to high rate of interest they are not able to repay the loan and caught in debt- trap.
  4. Formal sector credit is required in the rural areas to expand the farming and small scale business activities.
  5. It is important for the individual development of the people in the rural areas.

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