10TH CBSE SST Review any three merits and any two demerits of ‘formal sector of credit’ in India.

 

Ans:
Merits and Demerits of Formal Sectors of Credit:
Merits:
1. Helps to meet the working capital needs of production.
2. Helps in ongoing expenses of production.
3. Helps in completing production on time.
4. Helps in increasing earnings.
5. Low interest rates.
6. Easy access of loans to small cultivators and small scale industries.

Demerits:
1. Difficulty in obtaining loans.
2. Collateral issues.
3. Documentation could be a problematic issue for few.
4. Lack of credibility in rural areas.