list 4 demerits of commercial banks with respect to rural credit


Four demerits of commercial banks with respect to rural credit are as follows.

1) Formalities & procedures involved - 

The small borrowers in rural areas do not wish to invest time in the procedures and formalities laid down by commercial banks. This serves as a hindrance to the availability of credit in rural areas.

2) Lack of personal treatment

Rural people prefer to avail credit from regional lenders whom they know personally rather than commercial banks. This acts as a barrier in provision of rural credit by the commercial banks. 

3) Creditworthiness of borrowers

The commercial banks cannot grant loans before being satisfied by the creditworthiness of the borrower. Such criteria limits the availability of credit in rural areas.

4) Lack of awareness

Finally, the lack of awareness among the rural people regarding the credit schemes and availability serves as a big drawback in the availability of credit in rural areas.
 

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