Interest rate, collateral and documentation requirement, and the mode of repayment together comprise what is called the terms of credit.
Credit is in great demand for various kinds of economic activities-big or small investments, to set up business, buying cars, houses, etc. (ii) In rural areas credit helps in the development of agriculture by providing funds to farmers to buy seeds, fertilizers, expensive pesticides.
Let's explore the advantages of formal credit in detail: Increased access to finance. Economic growth and development. Poverty alleviation. Financial inclusion. Enhanced consumer protection. Lower interest rates. Improved financial discipline: