Answer : Formal sources of credit, such as banks and cooperatives, play a crucial role in economic development:
Promotes Investment and Growth: Availability of credit encourages individuals and businesses to invest in education, agriculture, industries, and infrastructure, which boosts overall economic development.
Regulated and Secure: These sources are regulated by the government or financial authorities, ensuring transparency and safety for borrowers.
Lower Interest Rates: Formal credit institutions usually charge lower and fixed interest rates, which reduce the financial burden on borrowers.
