Given that a large number of people in our country are poor, does it in any way affect their capacity to borrow?

Q.:- Given that a large number of people in our country are poor, does it in any way affect their capacity to borrow?

 

Answer:-

Poor have low capacity to borrow since they have no collateral to offer. As such, they cannot get any credit from formal sources of credit like banks and co-operatives. They mostly take loans from informal sources of credit like money lenders, friends, relatives, etc.