Question

Besides banks, the other formal major source of cheap credit in rural areas, are

• A. Money lenders
• B. Zamindars
• C. The cooperative societies
• D. Friends and relatives

Answer 1

Answer:

C. The cooperative societies

In rural areas, besides banks, cooperative societies are the major formal sources of cheap credit for farmers and small borrowers. Cooperative societies provide loans at lower interest rates compared to informal sources like moneylenders or zamindars. They operate on the principles of member ownership and mutual benefit, aiming to reduce rural indebtedness. Informal sources such as money lenders, zamindars, friends, and relatives often charge higher interest rates or operate on personal influence rather than structured rules.