Why do banks and cooperative societies need to lend more

Why do banks and cooperative societies need to lend more? Explain.

Answer

Banks and cooperative societies need to lend more:

  1. This would lead to higher incomes.

  2. People could borrow cheaply for a variety of needs.

  3. They could grow crops and set up small-scale industries, etc.

  4. Cheap and affordable credit is crucial for the country’s development.

  5. To save and reduce the dependence on informal sources of credit.

  6. It is important that the formal credit is distributed more equally so that the poor can benefit from the cheaper loans.